What the Experts and “Boots on the Ground” are Saying
According to experts in the mortgage industry, they are seeing an uptick in New Buyers and First Time Home Buyers requesting pre-approvals.
Connie Kim: There seems to be optimism in the mortgage industry at the start of the new year. How have the first two weeks of January been?
Ben Cohen: I’ve definitely seen an increase in inbound calls from people wanting to get pre-approved to buy a home. The psychological component of interest rates doubling – everybody gets it. [They’re asking] what can I afford? How does my payment look?
Current Trends in Southeast Michigan Market
We are beginning to see the same trend currently in our markets in SE Michigan as well. What is the explanation for this? Mortgage rates appear to be stabilizing and we should see them continue to decrease into spring. Additionally, with inflation lowering, mortgage rates will follow this downward trend. We expect mortgage rates to continue to improve to spring, but what if they do not? Should you still be buying in this market? The answer is YES! “Marry the home, date the mortgage” as my wise friend and loan officer Victor Bals tells me. It’s a really great point! Find your DREAM HOME now! And you can always refinance the loan later when pricing and rates improve!
Current Market Better for First Time Home Buyers
Comparatively, it is a MUCH better time for buyers right now compared to a year ago. A year ago, almost all reasonably nice homes drew in multiple offer scenarios which drove prices up. Consequently, many people, especially first-time home buyers, weren’t able to get into their dream home. The extremely high buyer demand and historically low inventory during this time was the primary cause and therefore many homes went for 30, 40, 50, even 100K over asking price! Now as inventory somewhat improves, and interest rates become more favorable moving into spring, we will be in a much better market for first time home buyers!
And What About Appreciation?
Moreover, and arguably even more important, is the appreciation that is going to occur over the next 10 years. Based on historical and projected data for Livingston County appreciation, you stand to lose a LOT of money not buying right now. For example, if you bought a home now for 350K, and you put 20% down using historical appreciation rates at 3.84%, and projected at 4.29%, in 10 years your home would be worth 510-530K! WOW! While there are certainly no guarantees, the projected data and historical data are generally fairly accurate, and we all know home values tend to appreciate over time! Therefore, there is a LOT more to lose staying out of the market now!
Conclusion
With all this in mind, I can understand why lenders are now starting to see more applications and requests for pre-approvals. Overall, low inventory will keep value up, however there are many more deals out there for buyers with less competition, AND sellers are still doing quite well as well!
BRING ON THE FIRST TIME HOME BUYERS!
See Link Below for appreciation data courtesy of MBS Highway.
Appreciation Results ($350,000)
Read the Original Article Here: Top LO Ben Cohen thinks first time buyers will return to the housing market this year