Happy Friday!
By paying attention to the most frequently asked questions we are getting, we can get a feel for what is on buyers and sellers minds.
Below, I put together a list of the most common questions we are hearing this year as well as our answers and advice.
FAQ #1: What will happen with interest rates this year?
So many financial gurus, lenders, and market analysts alike have been wrong on this one again and again over the last few years- it feels like a bad idea to make prognostications in this regard. However, we do know a few things.
The entity in charge of raising and lowering the prime rate is the Federal Reserve. They move prime rates up and down and these directly influence things like interest rates for credit cards, HELOCs and other short term borrowing mechanisms.
Mortgage rates are set by market forces. As inflation was coming down last year, the Fed signaled they expected to lower rates. This is because when we have a cooling economy, mortgage rates can come down. However, some of the new administration's policies could prove more inflationary. Tariffs and mass deportations could push prices for goods and services higher. In this case, inflation could stay higher as well. The Fed has now signaled a “wait and see” approach for this year to see how the economy fares.
Most experts now believe we won’t see mortgage rates decrease much this year. In our recent experience with home buyers, we are seeing many consumers accepting that higher rates are now a part of the economic landscape. Many buyers have been holding off purchases over the last year or two in an effort to wait for lower interest rates, wait for home prices to decrease, and wait to see who the president would be. We are now seeing buyers coming back into the market. Recently many buyers have been able to negotiate temporary or permanent rate buy downs on their mortgages and that has helped ease some of the economic burden.
FAQ #2: What is the market like right now? What do you expect for the rest of this year?
The market now seems to be picking up steam. The second half of last year was very slow- in fact, according to NPR, 2024 had the lowest number of real estate sales nationally in 30 years. It was almost as if people were so distracted that big decisions on big purchases just weren't in the cards. Almost immediately after the election, we started to get calls from buyers and sellers who were ready to dip their toes into the market again. That interest has continued to pick up steam through the new year. We are hearing this from agents across the board- the market is changing.
Serious buyers are back in the market, listings are getting offers, and we seem to be heading into what feels like a more normal spring market. We’ve heard from many folks that their industries feel more volatile than in years past and it has certainly been hard to make real estate predictions over the last few years, as well. What we know is that now feels like a more normal year- and past that, time will tell.
FAQ #3: If I have a home to sell, what do you anticipate is the best timing?
Echoing some of the sentiment from the answer above, so far things are picking up nicely for the springtime. If we had a home to sell, we’d probably focus on getting it on the market in the early to mid- spring (February to May 1st.) Granted, there is no election this year to stall the market in late summer to fall, but listing early last year made all the difference to some sellers. We see no reason to deviate from this plan.
FAQ #4: How do I coordinate a simultaneous buy and sell transaction? What do I need to keep in mind?
In buy and sell transactions, there are 3 options. People can buy their new home first and then sell. They can sell their home first and then buy. Or they can do them concurrently with a home sale contingency or with a bridge loan. I wrote a blog post on the ins and outs of this process a year or so ago. Click here to read about how to strategize a concurrent home purchase and sale.
I hope this is useful! Let me know if I missed any questions that are on your mind. Until next time!
