A great teacher of mine often says, “Being on the fence is the most uncomfortable place to be.”
When I am on the fence about something I feel like a knot in the center of a long rope that is being pulled back and forth constantly. “Should I” is holding one end of the rope and “Maybe I Shouldn’t” the other. The knot gets tighter with each pull and it is UNCOMFORTABLE. This is the stuff that keeps you up at night, affects digestion, concentration, relationships, work and general quality of life.
In the world of real estate, there has been ALOT of fence riding in 2023.
Interest rates hovering around 7% and prices that are still strong due to low inventory have given deep pause to some buyers. Other buyers are priced out of the market.
Some sellers question whether their house will sell. They spent months watching their neighbors over-priced house sit on the market without understanding why. It can be a tough pill to swallow realizing that you missed “the top of the market” and now your home is worth less than if you would have sold a year ago. Then there is that 3% mortgage to consider.
At least half of my clients were riding the Buy-or-Sell Fence this year and decided to wait. In general, buyers are waiting for lower interest rates and greater affordability and sellers are waiting for a more robust market with higher prices before they walk away from that 3% mortgage.
Is Waiting to Buy or Sell the Best Decision?
Buy or Wait?
In an interview, Barbara Corcoran, founder of The Corcoran Group and celebrity investor on “Shark Tank,” said “I think that people are coming to the wrong decision about waiting to buy a home right now. I think its the absolute best time to buy for a couple of reasons. One, interest rates will come down again. If you buy now you can refinance. If you wait until interest rates come down even by 1.5 points,.. everyone will come charging the market and you’ll be paying another 10% for the house.” At Portland’s current average sales price, that would be a $58,000 difference in sales price.
One of my trusted lenders Mark Aalto of Advantage Mortgage shared with me this week that he is “emphasizing that buyers need to be comfortable with the mortgage payment at today’s interest rates because we do not know when interest rates will come down.”
A combination of these viewpoints seems wise to me. Lower interest rates combined with low inventory during COVID created double digit appreciation and bidding wars for months. Just ask a spring of 2021 buyer. At the same time, we all learned a potent lesson regarding expectations through the COVIC pandemic. What we think or are told might last 6 months to a year, could be a much longer journey.
Buyers also have more negotiating power with regards to repairs and other terms right now. All of this affects a buyer’s bottom line.
Sell or Wait?
Corcoran said, “When all the buyers come off the sidelines, when interest rates come down, I’m going to get a lot more from my house than I would get right now,” If profit is your only objective, then perhaps you wait. The flip side of this is that the seller of Barbara’s next home will also be getting more when she buys.
My experience is that most sellers would love to make as much money as possible on the sale of their home but timing and life circumstances are equally as important. There is a stress in not leaving what no longer serves you and stepping into your next experience.
This brings us back to the BIG QUESTION.
When will interest rates will be coming down?
No one really knows this so to sit on the fence and wait for a different market is an open-ended experience.
Buying and selling a home is a very personal, multi-dimensional experience and there is so much to consider. If you are riding the Real Estate Fence, consider making a list of what is most important to you about this experience to help clarify your priorities. Talking it over with a trusted advisor, friend or family member can help you make the best decision for you in the moment and move forward with more confidence and peace of mind. It is always an honor to listen and share our knowledge. Thank you for your trust.