After a white-hot run over the past few years, the housing market is showing signs of cooling; home prices are dropping in many areas. In a June 2022 assessment of regional housing markets, CoreLogic determined that 45 markets have more than a 50% probability of seeing home prices fall over the next year – up from 26 markets in May, a 73% increase in one month. Also in May, according to Redfin, one in five U.S. home sellers lowered their asking prices, the highest rate since 2019.
The Prepared Are Pre-Approved
The fall in home prices provides a window of opportunity that most benefits homebuyers who are ready to make serious offers, and almost nothing tells a seller you’re serious like mortgage pre-approval. An offer with a mortgage pre-approval letter shows a seller you’re financially capable of buying the home, giving you an edge over bidders who don’t have their financing in place.
Getting a Good Deal
One of the surest ways to get a good deal on a home is to get a good real estate agent, one with intimate knowledge of the areas you’re interested in. Do your homework. Get referrals from family, friends, and colleagues. Check out the online profiles of prospective agents and interview a few before choosing the agent that’s best for you.
When searching for a good deal on a home, there’s another significant consideration: inventory. The Federal Reserve Bank of St. Louis reported a 37% increase in homes listed from February 2022 to May 2022, a sign that pandemic-era shortages are abating. This increased inventory gives homebuyers more leverage, so you should be aware of the number of homes for sale in the areas that you’re searching. Realtor.com posts data that can help you out.
Shouldn’t I wait for interest rates to lower?
Even the finest of financial wizards don’t have crystal balls; the mortgage-rate predictions that Fannie Mae and the Mortgage Bankers Association each made heading into 2022 turned out to be wildly off. While the future of interest rates is uncertain, you can always look to mortgage refinancing as part of your long term financial plan. And so should interest rates lower significantly in the future, for which there’s some historical precedence, you’ll likely be able to refinance at a lower rate, thus lowering your monthly mortgage payments. Locking in the lowest rate that’s available today may be the best strategy for both the long term and to benefit from the recent drop in home prices.
Contact us today to talk about how you can take advantage of today’s lower home prices.
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