09/01/2022
Is now the best time to buy? Let's discuss
Home prices across the country have dropped from an average of $450K in June to $435K at the end of August. This is the biggest drop in that time span since data started being kept in 2016.
Compared to last year inventory is is up 27% meaning more houses are available and prices are coming down. For buyers, this is a double whammy of good news!
These are negotiating factors that your realtor can use to ensure you get the best deal possible. Supply is starting to balance out to demand. Sellers are slashing prices more and more to entice buyers and that gives more power to the buyer. For the past 2 years it's been an exclusively sellers market but that is changing and buyers can negotiate more and more .
One negotiation you can do is instead of asking for a price reduction, you can ask for the same amount from a price reduction to be used to buy your interest rate down and pay for closing costs.
Here's some math for you, to show the difference in mortgage payment for a $25K price reduction vs a $25K interest rate buydown.
$500,000 at 6% = $2,998/month
$475,000 at 6% = $2,848/month ($150/month savings)
vs buying your interest rate down from 6% to 4.75%
$500,000 at 4.75% = 2,608 ($390/month savings)
Taking the same seller concession of $25K utilized in a different manner than lowering the price can save you an additional $240/month over lowering the price!
Most interest rate buydowns don't cost that much so you'll not only save more money per month but you'll also have money left over to pay for closing costs which can be around 3% of the loan amount.
Long story short, is now the time to buy, YES! Buy the house, start earning equity for yourself and when rates go down in the future we can refinance you into a better loan then. A home is an appreciating asset you can use for leverage that no other asset can do.
As the housing market strains to return to normalcy, who will budge first? Cash-strapped buyers or sellers looking to cash in?
