Buyers Waiting For Rates to Drop (Solutions)
There are approximately 735 million buyers (give or take 734 million) on the fence right now, “waiting for rates to come down” – before they buy.
At JVM Lending alone, we have over 2,000 pre-approved buyers who are on the fence or who have given up on their home search entirely.
As a result, I wanted to touch on a few solutions.
#1 – Temporary Buydowns!
I know I have beaten the buydown-dead-horse into a pulpy pile of hamburger, but I am beating it again because they are such an elegant solution. Sellers pay for them, and buyers can lower their rate by as much as 3% in year one of their mortgage! Even better, if buyers refinance before the temporary buydown period is over, they get the remaining funds to cover the cost of the buydown applied to their principal. We are starting to see a few stale listings too in many of our markets – so these buydowns could be the perfect solution to get them to move.
Please reach out if you’d like marketing assistance or if you have questions. I also highly recommend reviewing this blog for more info: The Beauty of Buydowns!
#2 – Less Competition.
I exaggerated at the top of the blog when I said there were 735 million buyers on the fence, but only a little… Today’s rate-reluctant-buyers are not taking into account of just how many other buyers will return to the market as soon as rates drop, and the competition will likely get extremely intense – like we saw when COVID hit.
#3 – Recessions Are a Good Thing/This Ain’t 2008.
I remind readers often that two things often come out of recessions: (1) lower rates; and (2) stable or rising home prices in response to lower rates. In this blog, Good News! Recession Coming Soon! , I share a chart that shows how housing performed well during every recession but for 2008. But 2008 was an anomaly, as we all know, due to extremely lax lending guidelines (that brought on a wave of foreclosures) and a massive excess supply of inventory. In this blog, This Ain’t 2008!, I explain how everyone mistakenly sees every market through the 2008 lens.
#4 – Nobody Will Keep Today’s High Rates Anyway/No Cost Refinances.
A recession is a near certainty now, despite the fact that government and Fed stimulus has held it off for much longer than expected. And, when it comes, rates will drop, allowing today’s buyers to refinance into much lower rates and usually at no cost, especially if they take advantage of JVM’s Rate Drop Free-fi®. Buyers may want to read this blog for more info in regard to this: When Will Mortgage Rates Drop?
#5 – The Housing Market Is Not Going To Crash.
I have blogged about this repeatedly, but today I am just going share this excellent podcast with real estate guru, Jason Hartman: Why Housing Prices Continue to Defy Expectations. Hartman focuses on the extremely low levels of inventory; the high number of household formations; the extraordinarily high levels of equity most homeowners have; and the extremely low rates and housing payments most homeowners have – meaning we will not see foreclosures or forced sales which are necessary for a “crash.” He also shares some very compelling charts.
Comments