In Central Texas, many buyers seem to be waiting on the sidelines due to recent mortgage interest rate increases and national news on market situations (which is different from our local situation). Hindsight is always 20/20 and what we know now is that during 2021 and the beginning 2022, we experienced the height of our market and prices have since been adjusted or have come down. We also know that we experienced the lowest interest rates of our lifetime during the last several years and rates are back to what I believe are normal (but still good) rates.
So why are buyers waiting? There is a belief out there that rates will go back down again within the next few years after the Fed gets inflation under control. Some also think that pricing may go down further. I am not so sure about that because economists in Central Texas are still projecting that there will be a shortage or homes locally over the next few years. But for now, there is a nice supply of homes to choose from compared to the tight market we experienced over the last few years. To me, it never makes much sense to throw money away on rent when you can buy.
So why not buy? The biggest reason is most likely: interest rates!
I was speaking with one of my “go to” lenders recently about what we can do to solve some buyer’s concerns about rates. We came up with some mortgage interest rate solutions of either buying down the rates on a longer term loan (for those that think the rates will stay steady or rise) or doing a “2/1 Buy Down” (for those that think rates will go down during the next 2 years). The 2/1 Buy Down reduces the 1st year interest rates by 2% and the 2nd year rate is reduced by 1%. So, for example, a 6.5% fixed rate becomes 4.5% the first year and 5.5% the second year. In this rate example, the savings for the first year on a $600k loan is $750 per month! These “buy downs” do cost money but why not write an offer that contains seller paid closing cost to cover the cost??? If rates do go back down later, you can simply refinance but in the meantime, you could save $$$ thousands (in this example) at seller expense.
If you need assistance with your next home purchase or are interested in some of these mortgage interest rate solutions, contact me today at 512-626-8811 or via my website: christinnell.com