"Stop buying houses!"
"It's a horrible time to buy!"
"Wait until the bottom of the market!"
We've heard them all - MISLEADING HEADLINES - I mean, just look at this image. HOW DISCOURAGING!
Today, I will be Myth-Busting Misleading Headlines!
Which leads us to...
Myth #1: "It's a terrible time to buy."
Well, is it? Check out this graph below, courtesy of Redfin:
Not only were there over 17k homes on the market as of January, 2023 - 21.4% of the homes for sale are selling below the list price. Clearly, this means that sellers are more willing to negotiate now, than before.
If you were a buyer in 2020-2021, you know exactly what I'm talking about. It was a crazy time of putting in multiple offers on multiple properties, only to be pushed out by people buying houses for 5-10% more than the sales price!
Myth #2: "Seller's won't contribute towards closing costs."
Really?! I just had buyers ask for 3% seller concessions towards a $750,000 purchase price. By the next morning, they had an accepted contract from the sellers.
Guys - back to the trend in the chart above, and seeing in the chart below that AZ's supply of homes is up 23.1% year over year - sellers are more willing now than ever to contribute towards closing costs!
Now, full disclosure: you need to check with your real estate agent because not every area in AZ is the same. Some cities, even some zip codes are different, and may be selling for at sales price or even higher still. So, be sure to check with your agent on your area that you're looking to buy. But, in general, sellers are working with buyers more now than ever in the past 3 years.
Myth #3: You must put 20% down to qualify."
This is just simply NOT true! Now, although your specific scenario might warrant 20% down needed to qualify based on your current financial situation - in general, it's just a misconception (or a myth) that needs to be BUSTED!
There are plenty of low down payment options out there. There is Down Payment Assistance. If you're a veteran, served in the military, or national guard, you could be eligible for VA Home Loan Benefits, which allow you to put nothing down.
The key here - have an experienced LO review your financial information and complete a detailed Pre-Qualification to know what your options are!
LAST MYTH: "We're going to wait.....""until interest rates go down" (AND/OR) "until the bottom of the market."
Let's start with the last one: "Waiting until the bottom of the market...."
The problem is, nobody knows when the actual bottom of the market is until a few months afterwards... For example: let's assume for a moment that NOW is the bottom of the market. By the time the market shifts upwards, we will look back and realize that a few months prior was actually the bottom. You'll never time the bottom of the market perfectly.
Now, moving to the "Waiting until interest rates go down.."
Yes - rates are higher than this time last year. But, if the 7 rate hikes that the Fed did last year taught us anything, it's that...
RATES ARE TEMPORARY
We really need to get this through our heads. We were spoiled for way too long with a superficial market, resulting in super low mortgage rates. Did you know that the Fed was buying $40 billion in residential and commercial mortgage-backed securities in 2020? Did you know the purpose was to repress mortgage rates and infate home prices? Did you know that the Fed started tapering it's purchases in 2021, and stopped buying mortgage-backed securities altogether September 15, 2022?
What's the point?
The point is - There is always a reason for rates going up or for going down. And, by what I just described in the paragraph above, it is obvious why mortgage rates increased heavily last year.
AND - based on every economic factor and economist that I follow, we should see a good mortgage rate drop by the end of this year!
Sometimes when we hunker down and "wait for this to pass," we also "let an opportunity pass."
I share all of this because I am passionate about homeownership! I'm passionate about helping homeowners understand all of their options and being 100% confident when moving forward, buying a home. I'm passionate about helping real estate agents understand the ins and outs of this mortgage industry and being able to educate their buyers!
So, if you, or anyone you know, is looking to buy a house, please send them my way! I'd love to walk them through this journey!
-Sean Price, Senior - Licensed Loan Originator