July 2023 Market Update

Renters are Buying Now, Existing Homeowners Will Buy In The Future

Interest rates had a tough week at the end of June, as of yesterday rates mortgage rates were 7.25%.  For months I have been explaining that high interest rates are preventing sellers who also need to buy with a mortgage from listing which is causing the extreme inventory shortage. For the most part most listings are a result of divorce, people downsizing (and buying cash), people moving out of the area, or estates/ homes of older individuals moving in with their children or into assisted living.

While it may seem over simplified, my advice has been: If you like the house and you can afford it, buy it.  Even if the interest rate is 50%, if your mortgage payment is the same as you rent (which is essentially 100% interest) you are still making out ahead. If rates go down, great, then refinance!  In fact, some lenders are offering a onetime no-cost refinance on their loans right now.  If the rates continue to climb, great, you purchased when they were lower. No matter what happens with rates if you have a home, you are in a better position than renting and waiting for a change that may or may not happen.

Because buying is a better financial investment than renting, right now the majority of buyers are currently tenants.  As the rates come down, relieving that inventory gridlock, we will see more current home-owners start looking again. These individuals understand that home prices will increase when rates decrease, but they are ok with that because while they are buying at a higher price, their budget is getting a bump, since they are also selling at a higher price. Renters won’t be able to get that financial bump to help make up for the high home prices.

My Advice: If you aren’t selling a home and can to afford purchase with the current interest rates, buy now!