My Computer Just Blew Up
Well, that may be an exaggeration, but when the Fed made a full half-point cut in the Federal Reserve rate, my email notifications started going off – ding – ding – ding. It’s as if all these financial experts had their emails just waiting, ready to push the “send” button.
What will this do to mortgage rates? What will this do the home prices? Is it time to buy? Is it time to sell? Should we all breathe into a paper bag?
Maybe, but I prefer eating something bad for me that tastes oh, so good!
OK, OK, OK, I feel like Joe Pesci in “Lethal Weapon II”. Here’s the thing: first of all, the Fed rate and mortgage rates are not the same thing. However, a cut in the first usually leads to a reduction in the latter. However, however, mortgage rates had already started coming down in anticipation of a Fed rate cut. So, they, the mortgage rates, may come down some more but not the full half-point, unless there is new anticipation of a further cut in the Fed rate.
What does this mean? We will probably see 30-year mortgages go under 6% and 15-year notes drop to the low fives. Figure a week or two for this to happen.
What will this do to the market? Some buyers will now get off the fence and start shopping again, which means prices will get firmer, if not creep up a little. Will it be a thunder roll? Figure more like a soft rain with forecasts for a wet fall.
Does this mean you should buy now before prices go up more? Absolutely. You should have bought when rates were 7% and prices were softer. Had you done that, you could be rejoicing and calling your lender to refinance at the lower rates.
Should you wait for rates to fall further? You can, but if you go back and read the preceding paragraph, you can see that waiting may get you a better rate but at higher prices. You see, if you can afford what you want at the current rate – whatever it is – you should always buy now and refi later if rates go down. If they go up, you can congratulate yourself and go to a nice dinner.
Now what about selling? Should you sell now or wait for prices to go up if rates come down further? Well, if you can wait, why not?
The only problem with that is that, unless you sell and move to Missouri where stuff is cheaper, you are probably planning to sell and buy something bigger or smaller or the same size somewhere else where prices are about the same.
When you do that, sell and buy, you just end up getting more and paying more. And, if rates drop too much, you might find yourself getting multiple offers on your house but having no place to go because everything you want to buy is in a bidding war.
So, we are right back where we started. If you want to buy, buy. If you want to sell, sell. We are still in a balanced market. You can get a fair price for your home and you can find a nice new home.
Waiting is never a solution. It is only a non-decision, and indecision has cost more people money than all the rice in China.
If you are thinking of making a change, call me at 602-796-5751, That’s my 24/7 cell phone. I will answer. You will be able to talk to me.
Thank you,
Joseph Callaway