Ask Maureen and Antoinette
Sarah asks:
I have been talking to friends and family who suggest I wait to buy a house until the interest rates go down. What do you think of that advice?
Maureen and Antoinette say:
Hi Sarah,
This is a very timely question which has variable answers based on each potential home buyer’s specific situation.
When clients work with us to purchase a property, our first step is to provide them with in-depth information about the neighborhoods they are interested in. Our 45+ years of combined experience as San Diego realtors allows us to share statistics, data, features, and factors that can’t be “Googled” in order to help guide our clients towards the best neighborhoods for their lifestyle and budget.
The second step is to review interest rates and loan options with a mortgage broker. Rates have increased over the last few months, however they are still historically low. One option to moderate your interest rate is to obtain a variable rate mortgage, also known as an A.R.M. (adjustable-rate mortgage). An A.R.M. will generally be fixed for a certain amount of time (seven or 10 years) and then it will adjust to the current rate. The strategy behind using this type of mortgage is two-fold. One—if you plan to own the property for a period of time shorter than the A.R.M duration, then you have captured the low interest rate an A.R.M. offers and you can sell before the rate adjusts. Second – if you plan to own the home long term, as a borrower you can refinance your property if interest rates go down to a rate you are comfortable with. Utilizing an A.R.M. mortgage can save you thousands of dollars in your annual monthly payment.
Once you have chosen a neighborhood and loan program, our third step is to educate our buyers in pricing realities. We have seen sales price appreciation cool a bit in the last few months in many neighborhoods. Some neighborhoods are continuing to show price appreciation, and some areas show small price decreases. What we haven’t seen, nor do we expect to see, are dramatic price declines. We live in America’s Finest City and people want to make this their home. In many areas and price points in San Diego we are seeing less competition from buyers over the last few months. Fewer buyers making offers on properties results in less overbidding which may keep the final sales price close to the original asking price. This more controlled environment is the window of opportunity buyers have been hoping for.
The bottom line is that the housing market is undergoing a shift because of higher mortgage rates, but the market is still strong. If you have been looking to buy a home over the last few years and it felt impossible to do so, now may be your opportunity. Buying a home right now isn’t easy, but there is more opportunity for those who are looking.
If you have real estate related questions that you would like us to answer in this monthly column, please email us at [email protected].
