We recently had a very nervous homebuyer (a single mom) come back to the market after sitting on the sidelines for about a year.
This is despite the fact that higher rates reduced her buying power.
She came back to the market because she saw the increase in inventory and the corresponding price reductions.
She made an offer on a listing that had two price reductions and that had been listed for a “whopping 45 days!” 😊
She is in contract now and very excited to move herself and her two young boys into a beautiful home of her own.
Surge In Contracts
I share the above story because it is hardly unique, as we have had a surge in contracts recently – and many of those buyers have very similar stories.
Lower Rates And Housing Shortage Too
There are two other reasons to buy now that some of our more sophisticated buyers are also taking into account: (1) Lower rates are coming; and (2) The housing shortage is not going to abate.
LOWER RATES: A sharp reduction in rates sometime in the next 12 months is almost a certainty now for a variety of reasons (inverted yield curve; inventory buildups; many recession signals; probable sovereign debt crises; layoffs surging, as employment reports are misleading; etc.).
If anyone is in the camp that interest rates impact home values, they should expect values to rise when rates fall. In addition, this is the 9,237th reminder that today’s buyers will very likely be able to refi into a much lower rate and payment in the near future.
Also – as another quick reminder and as I explained in this blog, housing performs surprisingly well during recessions (2008 was the exception).
HOUSING SHORTAGE: America has a chronic housing shortage because building has not come close to keeping up with household formations over the last decade.
This is something I alluded to again in Monday’s blog – and with builders cutting back everywhere the problem will only get worse.
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