A lot of the headlines across the country are mentioning a large decline in the real estate market. But what they are not differentiating is whether the decline is in "Transactions" or "Pricing".
What we do know in MA is that "Transactions" will most likely be down significantly versus 2022 due to the lack of supply. However, we do not anticipate that "prices" will be down. Locally, inventory is still very low and the demand to purchase is very strong. Year-ending 2022 numbers have already shown prices have been increasing even with interest rates significantly higher than they are today.
The Winter Opportunity: A Bigger Fish in a Smaller Pond
What might not be obvious to most among the headlines about the current state of the market is that the winter offers a unique opportunity. There's a big opportunity to take advantage of others' concerns about the market and get ahead of the game.
The whole idea of "marry the house, date the rate" has gone viral lately, but there is truth to it—you're buying a home, not a rate. You can always refinance later on once rates go back down.
Expert Insights on Interest Rates
Rates are coming down from their highs, and Chris Devin of Cross Country Mortgage believes we will be in the mid 5% range later this year and possibly back into the 4%s not too long after that. Mortgage executive Barry Habib echoed these thoughts on The Performance Experts podcast a couple weeks ago.
Cross Country Mortgage Programs:
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Waived fees for refinances completed within 18 months of closing.
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Creative "buy down options."
Strategy in the Current Market
In today's current market, I've seen more homes accepting offers at below listing price than I have in the past couple of years. This leaves room for creative options: instead of a price reduction, seller credits can be negotiated to buy down rate points and significantly reduce payments.
When rates come down even further, as anticipated this spring and summer, the gap will be shortened and it will bring more people back into the marketplace. The benefit of buying now is the ability to refinance later when rates are more favorable, and avoid the more competitive atmosphere that will come from lower rates.
Supply and Demand: No Bubble in Sight
With inventory still very low, I fully expect multiple offer scenarios to be the market norm. There are only 1.14 million homes available nationally as opposed to 4 million in 2007; Barry Habib says "it's almost impossible to see a bubble."
In this environment, I also expect rental prices to increase with low inventory and high demand. Building equity for yourself is the best solution.
