Why Waiting for Interest Rates to Come Down is a Bad idea… Here is a Proven Strategy!

2 Reasons that answer the question: Should I wait for rates to come down before purchasing a home?
1. INFLATION MAY REMAIN ELEVATED.
The Federal Reserve’s economic stimulus programs during the pandemic, plus massive government spending during that time created the highest inflation rate since the early 1980s. Annual consumer inflation hit a high of over 8% in 2022. Since then, inflation has declined considerably, with the latest numbers indicating a 4.1% annual inflation rate. Even so, the current annual inflation rate is double the Fed’s target of 2%. If the annual consumer inflation rate drops toward the Fed’s target of 2%, mortgage rates could drop as well. This may not happen in a meaningful way for another year or two.
The good news is that inflation generally causes real estate values to increase. This means that homeownership is still one of the best ways to build wealth in this economy.
2. BOND SUPPLY WILL REMAIN ELEVATED.
Approximately $7.6 trillion of US government debt is scheduled to mature in the next year according to recent reports. That’s an enormous amount of debt that will need to be refinanced at current market rates vs. the low rates of the past decade. This means interest expenses on government debt will increase, leading to more government debt to pay the much higher interest costs.
Not only that, but the costs of mandatory government spending programs like Social Security, Medicaid, and Medicare are increasing at staggering levels with no signs of slowing down. All this means that there will be a massive supply of bonds coming into the market throughout the next few years to pay for that spending. Investors will likely demand higher interest rates on those bonds. This means that interest rates in the broader bond market (including mortgage rates) will likely remain elevated for at least another year or two.
The good news is that interest rates aren’t nearly as high as they were in the 1980s. Mortgage rates hit an all-time high of 18.63% in October 1981, according to Freddie Mac data. People still bought homes in those days, so don't get discouraged by today's interest rates! Did you know... the 50 Year average of Interest rates is around 7.75%? So, we're right there today on that average BUT your have options to mitigate higher rates. See the presentations and Data below for some great strategies.
The presentations to the right, and below, will help explain HOW to Purchase real estate more affordably in this higher rate environment...
TO CREATE LASTING WEALTH... IT'S ALL ABOUT STRATEGY.... NOT RATE!
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Proven Financing Strategies to WIN in Real Estate --
https://brentwillis.lender.marketing/presentation/65896/
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A Rate Buy Down Guide - It walks you through all the various Buy Downs so you can see which is right for you!
https://brentwillis.lender.marketing/presentation/63199
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TOP 5 Reasons to Buy Today --- "Marry the House, Date the Rate"
https://www.willishomeloans.com/presentation/68606/
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Here are 2 compelling Mortgage Strategy Articles, with current market data, graphs and charts, to help you understand the real estate market, Why it's behaving the way it is and How we'll Guide you through it!
https://www.godreamlender.com/article-view/the-federal-reserve-vs-the-housing-market
https://www.godreamlender.com/article-view/why-buyers-have-an-advantage-in-this-market
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What's more important to you, a Rate or a Home? Seriously, what's more important? I can tell you... its the home as the rate can always be refinanced! In the low inventory environment, if you wait for rates to drop, more competition will flood the market and only drive prices up.
Question: If you wait for a low rate BUT you have to pay another $50-150K for the home you want, due to the increased competition b/c everyone else was waiting on lower rates too, have you really won? NO! It all goes back to the age old, and true, economic philosophy of Supply and Demand. You want to move when demand is lowest, which is now, especially if you can structure a seller buy down to achieve a lower rate from the start. If rates drop in the near future, then you can refinance your loan while everyone else is overbidding on too few number of homes.
TO CREATE LASTING WEALTH... IT'S ALL ABOUT STRATEGY.... NOT RATE!
P.S. To See the latest episodes of my TV Show, Financing The American Dream, click the link below... If you know of a great local business we should profile OR a really cool event or cultural experience that needs highlighting, please reach out to me!
https://www.godreamlender.com/the-american-dream-series

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