Are you considering buying a home in the Twin Cities but you arent sure whether now is the right time to buy, especially with higher interest rates in play.
In this blog, I share 4 reasons why right now is the perfect opportunity to buy a house in the Twin Cities and why waiting until the spring will end up costing you thousands of dollars more.
Reason #1: Overall housing market stability
The first reason why now is a perfect market opportunity to buy a home is the overall housing market stability. This seems odd especially because every single newsline you see right now is talking about the impending doom of a recession and lets be honest, we are all feeling the impacts of inflation. However, what you may not know is that in 8 of the last 9 recessions, home prices INCREASED rather than decreased. The one recession where home prices tanked was the recession that was CAUSED by the housing market in large due to horrendous lending practices.
Now we are in a much safer lending market not just anyone can go next door to get a mortgage. Lenders have much higher standards and are qualifying people for homes that they can actually afford.
reason #2: prices have leveled out for the season
Another reason why now is a great opportunity to buy a home is because overall home prices have leveled out for the season. This was expected as we head into the slow season which is impacted by:
- The winter months
- The school year. A huge part of the ownership population are parents/ families. They dont want to uproot a kid in the middle of the school year.
reason #3: reduced competition
The next reason why now is a great opportunity to buy is the reduced competition in the market.
But to talk about competition, we have to address the elephant in the room interest rates. I cant lie to you, it does suck that it is more expensive to borrow money right now than it was last year, which ends up making a negative impact on overall buying power. But there are two huge pros to this increase in the interest rates.
- Reduced competition. Because it is more expensive to borrow, there are fewer active buyers in the market. When there is less demand, home prices are more negotiable and you will see far fewer homes selling for thousands of dollars above asking. Buyers ALSO have more time to make decisions versus having a seller call for highest and best offers 24 hours after the house went live because they already have 8 offers on the table.
- Rates change. Most lenders will require that you to keep your existing mortgage for a minimum of 6 months, but after that time period you are able to refinance your loan if interest rates drop. There are so many programs available from a multitude of local lenders that you can explore that even offer a free refinance option.
reason #4: negotiation power
The final reason why now is a perfect opportunity to buy is you have more negotiation power as a buyer. I am talking about more than just the purchase price of the home. Because yes, we all want to spend less money, but realistically there are SO many other moving pieces in a real estate deal that can make a bigger impact on your experience as a home owner. Your negotiation power can allow you to ask for a number of things such as:
- A home inspection. During peak buying seasons, you may see people opt out of an inspection in order to make the offer more compelling when competing with others.
- Repair requests or money back. You have more leverage to ask for items. Now I dont mean you should have an inspection with the mind set that you ARE going to get something back, it is just an option that you have. I just worked with a buyer that was able to ask for $20k to be escrowed for a roof replacement. That doesn't happen in multiple offer situations.
- Seller paid closing costs. You can also request that the seller pays towards your closing costs to reduce the amount of cash that you need to bring to the closing table. This is HUGE for first-time homebuyers because it is expensive to purchase all the new items that you will need as an owner (think lawnmower, snow blower, dryer vent maintenance, etc)
waiting could cost you $$$...
Come this spring, finance professionals are expecting interest rates to come down again, closer to 4-5%. With that brings more competition. Its all about the supply and demand balance and it could end up costing you thousands of dollars more to purchase, even if the interest rate is lower than right now because home prices will sky rocket. Again.