My View From Inside

Mortgage rates have finally come down to their lowest point in a year and a half and may continue down as more Fed rate cuts are expected in the coming months. Lower rates helps with affordability challenges facing home buyers.

With rates trending down, today’s market is a sweet spot for buyers—and it’s one that may not last long.

Should I wait to buy when rates come down more?

This is the strategy of many home buyers – wait for the busy spring market when rates will (hopefully) come down more and a surge of new listings will hit the market.

If that’s the strategy of the masses, what will that likely do to home prices? According to many experts, it will put even more upward pressure on home prices. 

“The downside of increased demand is that it puts upward pressure on home prices as multiple buyers compete for a limited number of homes. In markets with ongoing housing shortages, this price increase can offset some of the affordability gains from lower mortgage rates.”

– Nadia Evangelou – National Association of Realtors (NAR)

What will happen when rates dive to the 5s?

The true turning point will be if rates dip into the 5s. That’s the magic number. 

With rates hovering around 6% now, it won’t take much more rate drops to really see the buyers come back in droves. According to a Bankrate survey, if rates dip below 6%, over 50% of homeowners will be motivated to buy.

While we all welcome lower mortgage rates, trying to time the market by waiting for rates to drop further could actually backfire. 

“It’s one of those things where you should be careful what you wish for. A further drop in mortgage rates could bring a surge of demand that makes it tougher to actually buy a house.” 

– Greg McBride – Chief Financial Analyst, Bankrate

Home prices and inventory today

Home prices have remained relatively flat over the last year with the median price hovering right around $1.1 mil. However, inventory has been improving dramatically giving home buyers more options and better negotiating leverage. Active inventory jumped 33% over last year to 391 homes for sale in the Conejo Valley. This may not last long if rates continue down.

Conejo Valley Median Home Price

Bottom Line…

The market has been slowed by high interest rates over the last couple of years. That tide is quickly turning and the message is getting out. The more rates drop, the more buyers will come back to the market increasing your competition.

Right now is your opportunity to get ahead of the market. While you may end up with a slightly higher rate than you would 6 months from now (or maybe you won’t), a future drop in rates can be easily offset by an increase in home prices, or even worse, steep competition from other buyers and missing out on your dream house.

Take advantage of this market before the masses come back!   

Ready to talk? Feel free to reach out (818) 384-9929 | Michael@ConejoValleyGuy.com