Contemplating a move? The question of whether to wait for mortgage rates to decrease before taking action might be on your mind. Let's delve into some insights that could help you make an informed decision.
In the realm of housing, the dynamics between mortgage rates and buyer demand are well-established. Typically, as rates rise, buyer demand tends to decrease. This trend emerges because potential movers may hesitate to commit to a higher mortgage rate for their next home. Consequently, they opt to postpone their plans, awaiting a more favorable rate environment.
Conversely, when rates begin to decline, the landscape shifts. We witness a transition from sluggish or tepid demand to robust and lively activity. This shift occurs because a significant portion of buyers who were previously on the fence due to higher rates re-enter the market, ready to execute their moving plans. The graph below illustrates this correlation and provides insight into our current position:
As Lisa Sturtevant, Chief Economist for Bright MLS, aptly puts it:
"The higher rates we’re seeing now [are likely] going to lead more prospective buyers to sit out the market and wait for rates to come down."
Why Waiting Might Not Be the Best Move
If you're grappling with the question of how this impacts your moving plans, here's a crucial consideration. According to experts, mortgage rates are still anticipated to decrease this year, albeit slightly later than initially anticipated.
As rates decline, a surge in market activity is expected. Consequently, you may encounter heightened competition from other buyers when you embark on your home purchase journey. Waiting could potentially intensify the stress of your move, as increased demand may lead to more instances of multiple offers and accelerated price growth.
However, if you're prepared and able to sell now, seizing the opportunity might be advantageous. Acting promptly could enable you to move ahead of the competition, offering a smoother transition to your new abode.
When deliberating whether to wait for rates to decrease before making your move, it's essential to consider the interplay of buyer demand. As rates decline, competition is poised to intensify further. If you're keen on staying ahead of the curve and capitalizing on current conditions, reaching out to a real estate agent could provide valuable guidance.