Watch the original video: Housing market meltdown: What you need to know
Here is your May 2024 Market Update
Rates VS Inflation
The Fed has taken a strong position that the only way they’re going to lower rates is if inflation goes down in a meaningful way. All three inflation numbers that came out in April were high. You can probably see where this is going….
What Happens When Rates Finally Drop?
In the first week of May, the jobs report came out. They were expecting 243,000 jobs but only reported 175,000. This prompted the Fed to lower mortgage rates and we saw the bond mark go up. This sounds like good news, but for the past year I’ve been telling my buyers that waiting for rates to drop is a losing proposition. There’s a huge backlog of people waiting to enter the housing market, so the instant rates drop, that demand will increase home prices, and you’ll stay priced out forever. If this recession doesn’t turn around though, the Fed will eventually step in and prioritize affordability over fighting inflation, and lower rates. The key then, is to find creative ways to afford a home now before that happens.
How to Buy a House Intelligently
It’s important to take advantage of the fact that sellers are incentivized to cut a deal in this current market. We’re seeing lots of sellers covering closing costs or offering a temporary buydown. This is where you can get into a lower rate for the first three years on the seller’s dime by getting them to pay a large credit towards your purchase. We haven’t seen these kinds of deals for the past ten years, but the market hasn’t looked how it does today in the last ten years.
Financing an ADU
Accessory dwelling units (ADU’s) are one of the biggest opportunities available in states like California, Oregon and Washington. These states have streamlined the zoning and permitting process to allow homeowners to finance these additions to their property in much cheaper. An ADU will allow you to supplement a higher mortgage payment with rent income, which can open up a lot more options for people on the border of affordability.
Reach Out. If there is anything I can do for you or if you would like more information about the current market, please feel free to contact me. Stay tuned for more updates, and I hope you have a great March. Talk to you soon.