The news these days is all about doom and gloom. There is a saying in journalism, “if it bleeds, it leads.” That means the drama, the controversy, the doom and gloom…it sells clicks, papers, and TV audiences. As a result, these are the statistics that most people believe.
However, our current market is nothing like the 2008 meltdown. Despite current tech layoffs, there is still a robust job market and a housing shortage. After many Fed rate increases (and possibly a few more to come), rates are starting to drop.
Many economists believe we are headed for a recession, even though, by the definition of a recession (two months of a decline in GDP), we were already in one. Because of the strong job market and being in an election year, the Fed said we were not in a recession, despite the GDP decline.
Typically, in a recession, mortgage rates drop. If we start to see lower rates, buyers will be back in the housing market and the likelihood of multiple offers and prices rising becomes high. So, for those buyers currently on the fence, it might be a wise move to get into a home now and negotiate a seller credit for a 2/1 or 3/2/1 rate buy-down. If rates drop in the next 2-3 years, homeowners can refinance into a fixed lower rate and not be in a bidding war trying to buy a home.
I just got a buyer into a home with the 2/1 buy-down, giving them a first-year rate in the 4% range. It will go up a bit more in the second year, but still lower than current rates. If they choose to do a refinance before those two years are up, the remaining unused buy-down money can be used towards their mortgage or refinance. As a final side note, many mortgage companies are offering free refinancing in the next 2-3 years!
