We were recently contacted by future first-time homebuyers who are looking to prepare for a possible purchase next Spring. They asked two questions: 1) What do we need to do to prepare? 2) What do we think the future of the market will look like next year? They did preface and acknowledge that we don’t have a crystal ball, but I do have some thoughts. So I broke them down into two sections below:
Prepare
One of the first things I would do immediately even if you’re not going to be ready until next spring would be to speak with a lender. Don’t have them run your credit yet as you’re not quite there, but go over your income, finances, debts (if any), and where you think you’ll be by spring. If you have those free credit scores with your credit cards, give them the #s as it’ll be a rough idea of what you qualify for. From there they can work on different scenarios based on today’s rates and give you an idea of what your monthly payment would look like… again based on today’s rates. Rates constantly change and they are much different today than they were 6 months ago. Your credit score also has an impact on your mortgage interest rate. So if you’re on the cusp, a good mortgage professional can tell you what you need to do and goals to hit to be in the best position by spring.
Once you determine a price and monthly payment that will work for you, schedule a time to meet with a Realtor (or us) to go over your needs and goals. I would also ask the Realtor (or us) if they can take you out to the communities of interest based on your comfortable price-point and budget. It’ll give you an idea of what you want for when the time does come and you’ll be ready. You’ll be more prepared than the competition and that would be a huge advantage. Your Realtor should also throw in his/her 2 cents on the best communities for your price point. If you need a referral to a great mortgage broker, we have you covered!
The Future of the Market
I’ve started to feel the market cool off as of late which is a great thing for buyers. Much of it stems from the combination of high prices and higher interest rates. With that being said, rates started to come back down again over the past 7-10 days which has brought many more buyers back into the marketplace and I’m seeing multiple offers again. I’m not seeing these $100,000 above the asking price offers anymore and many times starting to see below asking offers. It’s feeling like a balanced market where buyers are getting the homes they want and sellers are getting the prices they’re asking for.
Interest rates will more than likely follow whatever inflation does. We’re expecting updated inflation data on Wednesday 8/10. If it’s still higher than expected, the Fed will have to continue to increase interest rates. They’ve already said rates will come back down once inflation is under control. One of the reasons for the recent mortgage rate dip was because loans were reflecting a hope that inflation has started to curb.
What’s important to know is that buyers have not given up and still have money to buy. Many have just hit the sidelines to reset and see what things will look like once the dust settles. They will be back. And if rates are coming back down by next spring, it will be a competitive hot spring.
Additional Notes
In the history of real estate, nobody has ever lost money in an 8-yr cycle, so I always tell my buyers… even if this is a 5yr plan, would you still be comfortable in this home if it turned into 8? If the answer is yes, then it won’t matter when somebody buys. People lose more money trying to time the market as opposed to just taking action. I haven’t come across anybody that regretted buying and holding a home, but I do hear regrets all of the time from people that wish they never sold their homes.
I think there are great opportunities out there right now and I myself have been looking for an investment.
Final Thoughts
So if buying a home next spring is on your mind, and you’re looking in the Orange County, CA area, do not hesitate to reach out to us now to get the ball rolling. Buyers have higher levels of success when they over-prepare ahead of time. If you’re looking outside of Southern California, we network with the Top 1% agents around the country and can help point you in the right direction. You’ve got this!
