Less than a month separates us from the actual start of spring, and some homebuyers are already preparing for a busy season. Spring is always a busy time of year for house sales, and this year's promising economic trends can stoke the flames even more.
(Photo : by SAUL LOEB/AFP via Getty Images)Less than a month separates us from the actual start of spring, and some homebuyers are already preparing for a busy season. Spring is always a busy time of year for house sales, and this year's promising economic trends can stoke the flames even more.
The Federal Reserve is largely anticipated to reduce the benchmark interest rate range in 2024, maybe starting in March, after rising rates for the greater part of two years in an effort to combat inflation. Lenders have already started to charge less for mortgages, and if the Fed sticks to its plan to slash rates, home loan rates may drop considerably more.
Furthermore, if inflation slows down, living expenses may stabilize and homebuyers may be able to devote a larger portion of their income to mortgage and down payment installments. In light of this, prospective homeowners could be evaluating the market and attempting to predict the course of the spring housing season.
Brian Shahwan, a mortgage banker and broker at William Raveis Mortgage, suggests that if mortgage rates decline as anticipated during the spring homebuying season, it could potentially address the inventory shortage by encouraging current homeowners to sell and buy new properties.
However, Shahwan highlights a potential issue where reduced mortgage rates may enhance buyers' affordability, leading to increased competition and consequently driving up home prices.
Maureen McDermut, a Realtor at Sotheby's International-Montecito, acknowledges that while mortgage rates might decrease this spring, it remains uncertain whether the resulting increase in inventory will meet demand adequately.
McDermut suggests that although inventory levels may see a slight rise, it's unlikely to reach the necessary threshold to balance demand. However, she notes promising signs indicating that more homeowners, particularly retirees, may choose to sell their homes this spring, driven by the prospect of rising demand and the potential for bidding wars.
Tips for Navigating the Competitive Spring Housing Market
When the housing market is competitive, as it is anticipated to be this spring, it is advisable to organize your affairs before making an offer on a property. Recall that sellers are wary of any issues that can result in the sale of their house falling through escrow.
Begin by obtaining a mortgage preapproval, as opposed to merely being prequalified. By doing this, you will be able to better understand where your money is coming from and establish yourself as a serious buyer.
Of course, if you're thinking about purchasing a house this spring, there are other factors to take into account.
Buying a property might be problematic, for instance, if you only intend to live there for a few years, as you might not have enough time to accumulate equity. Therefore, if property values decline, you can find yourself upside down on your mortgage-owing more than the house is worth-when you decide to sell.
