Analysis leads to paralysis, and this holds true for homebuying.
It’s the biggest expense you’ll ever encounter, aside from retirement.
That’s why it’s so important to get it right.
And right now, many people are getting this wrong. Very wrong, actually.
But there’s still time to fix this.
So, what are people doing?
Many people assume with financial conditions that whatever happened recently will continue forever.
In fact, financial conditions are ALWAYS changing. Change IS the constant.
And right now, many people are fixated on mortgage rates.
As a result, many homebuyers are sitting on the sidelines because mortgage rates are high.
Yes, mortgage rates are high, but that isn’t ALL bad.
How come?
Higher rates scared off many buyers, and it’s better to look when LESS PEOPLE are competing to buy a home, NOT more.
“I’m concerned that there aren’t enough competing buyers…” – Said by no homebuyer, ever.
I sometimes joke that in 2020 and 2021 even a home with no front door could be sold in three days.
Conditions like that pressure many buyers to make poor choices, often with lasting consequences.
Thankfully, things aren’t the same now.
Of course, prices are very high. They are.
However, waiting for lower rates means waiting until people can afford to pay even more than now, likely making things worse for homebuyers in a lasting way (i.e. price)
It’s also true that declining interest rates tend to coincide with recession, but in areas with extremely little inventory (and buildable land), current and future inventory can be a bigger issue.
That’s why a lot of newly built single family homes are either 1) in far-off towns where most people wouldn’t normally intend to shop, or 2) in the multi-million dollar price range.
Here’s what you need to remember…
Rates will eventually decrease when either inflation has been tamed, or we encounter the next recession.
Once rates fall, refinancing is easy for those with strong home equity.
After all, you can refinance a home, but unlike something you bought at a retail store, a “price adjustment” results in a reduction in home equity, not a refund from where you bought it.
Date the rate, marry the price, and update your financial plan to maintain a strong (financial) marriage.
If you’re considering a homebuying transaction, let’s talk and set your household up for success.
This blog was written by Jeremy Bohne, Principal & Founder of Paceline Wealth Management. Paceline is a fee-only investment advisor serving clients in the Boston area, and on a remote basis throughout the country. Paceline specializes in helping tech and biotech executives, physicians, and those seeking financial planning services.