Strategies to Navigate a Tough Market

Rates are still low but steadily climbing and likely to reach 4% by the end of the quarter, much sooner than expected.  World events such as Covid and the possibility of a war in Ukraine will impact mortgage rates directly, as the volatility drives investors to buy US treasuries, which brings rates back down.  There are always many caveats involved in how mortgage rates are determined, and it’s easy to get overwhelmed when trying to find the most helpful information for each homebuying situation.  People are looking to spend money on homes but are finding little to buy at present.  Winter is the time of year when there is traditionally low inventory, and there are far fewer homes available on the market than ever. 

Buying a house today is so much more expensive in terms of what the house itself costs when compared to borrowing costs.  In some areas, a ranch-style home that cost $250,000 in 1995 is now valued at $2.5 million, which is a prime example of inflation.  When properties reach such high prices and are on the market too long, realtors often think there’s something wrong with them.  This not only makes it difficult for buyers to find anything they can afford, but sellers are often under time constraints themselves if they are buying a new home contingent on the sale of their old one.  What options are open for both buyers and sellers in such a tight market?  Patience, though sometimes difficult, can benefit both sides of the equation.  One possible strategy to help sell a home that has spent too many days on the MLS would be to take it off the market and re-list it at a later date.  If buyers can wait for the spring when rates rise and prices fall to compensate, there should be more to inventory choose from.  Real estate is always going to go up and down, but someday will be worth more than it is today.  In terms of longevity, owning property is the best hedge against inflation.  Jeff's guests this week:

- Justin Hardman from Deephaven Mortgage explores non-QM loan products.

- Reverse mortgage specialist Nina Penny joins Jeff to discuss refinancing. 

- Connie Hernandez of PMA Covina talks about rate increases and the value of taking money out of your home.