KING COUNTY, Wash. - If you’re in the market to buy a home, chances are the Federal Reserve’s interest rate hike was disappointing. However, experts in both the housing and financial markets said if a home buyer is prepared, right now could actually be the right time to put in an offer.
Realtor James Owen of Marketplace Sotheby’s International Realty said while home inventory is significantly low compared to historical figures, inventory is more than double what we’ve seen in the last year or two.
"We are definitely seeing a shift right now in the housing market in the last three months," said Owen. "I think it’s a good thing when a buyer can actually decide if they want to write an offer, write a clean offer, have a great representation and maybe have the home inspected to know what they are actually buying."
Owen said the housing hysteria appears to be cooling with buyers now having the opportunity to make time to see a home, maybe have a financial contingency attached to an offer and not having to compete with multiple buyers which can wildly escalate a property’s list price.
There are other factors to consider right now. The Federal Reserve is raising interest rates and rising mortgage rates are cutting into people’s purchasing power.
The stock market is also taking a plunge, which some would’ve considered using as down payments.
"I don’t think this is 2008. This is not the Great Recession. This is not a huge bubble. This is a shift and a pause and potentially a bit of a pullback," said Owen.
Jim Black, CEO of the Redmond-based financial advisory firm The Retirement Solution, said there are two competing forces at play: inflation which is making everything more expensive and mortgage rates.
Black said to expect interest rates to continue to rise with projections anywhere from 3 to 3.5% by the end of the year.
"If I’m looking to buy a house, I would be looking to lock in that rate as quickly as possible. I do not expect the mortgage rates to be lower in the next few years than they are today," said Black. "If you’ve got money in the bank, if you’ve got money in CDs and savings accounts, we are going to start seeing those rates go up as well. So the savers should actually enjoy this increase. It’s only if you’re needing to borrow money that it’s going to create a problem."
The stock market is also expected to keep dropping and Black estimates by another 10% by the end of the year. He advises against making any major moves.
"It’s a cycle and the cycles always happen, and they will always continue to happen. The people who are going to get hurt are the ones who panic. I wouldn’t be looking to make any major moves," said Black. "Hopefully, if somebody’s got money in the stock market, it’s money that they don’t need for five to ten years. If they can leave it in the market, I’m confident it’ll bounce back."
When it comes to buying a home though, both experts agree, waiting may not be the answer.
"If you have the right real estate advisor, you find a home that you like, you don’t make an emotional decision, you stick to your criteria, you’re buying a monthly payment that you can afford and you have five years plus time on the horizon—get that property!" said Owen.