Should I wait ’til next year?

I've recently been approached by potential buyers who are contemplating whether it would be more advantageous to delay their purchase until next year, in hopes of a potential drop in prices or a decrease in interest rates. This hesitation is understandable given the unpredictable nature of the real estate market, and the fear of making a purchase right before a market downturn.

However, it's important to remember that everyone's circumstances are unique, and the best decision will depend on your individual situation. Numerous financial experts are forecasting a significant decrease in mortgage rates, potentially around 2%, within the next 12-18 months. Currently, we're witnessing a significant shortage in housing inventory, with any appropriately priced property up to $2 million attracting multiple offers. For instance, I'm finalizing a deal on a townhouse tomorrow that had eight competing offers.

Homeowners who have purchased or refinanced in the past three years are reluctant to relinquish their 2.5% interest 30-year fixed mortgage. This could change if interest rates decrease as predicted. However, lower interest rates could also attract buyers who are currently priced out of the market, maintaining the inventory shortage and potentially driving prices up further. Real estate expert Barbara Cochran from Shark Tank predicts a 20% increase in real estate values over the next few years if interest rates decrease as anticipated.

A strategic approach for potential home buyers could be to secure a property now, while there is less competition, and refinance when rates decrease. This strategy not only gets you into your home sooner but also allows you to benefit from the predicted appreciation over the next few years. A 20% increase over two years on a property you live in, thus eliminating rent, seems like a beneficial deal to me.

I'd be happy to discuss this further to see if this strategy aligns with your circumstances, or to hear your thoughts on the matter.