Explore the latest financial landscape in our new YouTube video as we delve into the recent decision by the Federal Reserve to reduce interest rates. Learn how this move could impact various sectors of the economy and what it means for consumers, investors, and the overall financial market
You’ve seen the article about the Fed possibly reducing interest rates in 24 and end of 25, and you’re seeing all the articles, you’re probably getting texts from lenders saying, Hey, now’s the time to buy. Interest rates are going to get reduced. We don’t know. We don’t know what’s going on. So here’s what we do know. We do know that the Fed has said this, but we don’t know that it’s going to happen and we’re not going to believe it’s going to happen until it does happen. And the reason is is before the pandemic in like 1617, the Fed told us several times that they were going to raise interest rates and they never did. And then a year or so later, the pandemic happened and interest rates dropped significantly. But here’s what might happen if that does occur. So right now, interest rates are over seven.
We know that if interest rates drop to the six and a half to seven range, we’re going to see more buyers entering the market. Right now in Sarasota Mane counties, we’ve got three months to four months of inventory. Depending on what county you’re looking at and what type of home you’re looking at. Basically it’s divided into whether it’s a condo or a single family home. That’s actually not bad. That means that most buyers have choices. It means sellers are on the market for a little bit longer than they had been, but they’re still selling. They’re still selling for a good price. They buyers are not beating the sellers up as far as pricing goes, and things are actually working out pretty well. Now, if it drops to below 6.5%, if we get to the six to six and a half percent range as far as interest rates goes, we’re going to see a swell of buyers come into the market and that is going to raise prices.
That’s what that is going to do. So when you have more buyers, then you have sellers selling prices are going to go up. That’s just economics. It’s how it works. Now what’ll happen is if we then see a interest rate drop below 6%, I can promise you it’s going to be nuts. It’s got to be crazy out there. Again, I’m not saying it’s going to be like 2021 where people are running around with their hair on fire, but it’s going to be crazy because people are going to see that as their last ditch effort to get that home under 6% and get locked in under that. And I don’t blame them. I totally understand why they would feel that way, but here’s what you can do. All the, not all, but a lot of the mortgage brokers are saying, buy now. Buy now before prices go up.
Yeah, that is the case. Buy now. Because if the interest rates come down that far, prices are going to go up because laws of supply and demand are basic economics from high school are going to kick in and we’re going to see that when there’s more demand, the prices are going to go up. It’s just how it works. So that’s what we’re going to see. Now, does that mean that you should buy right now? I honestly dunno. I dunno what your situation is. I dunno what your financial situation is. I dunno what your saving situation is, your current housing situation. That is a discussion you need to have with your realtor, your lender, and your financial advisor if you have one.
If you do buy now, here’s what people are doing. They’re buying now at the higher interest rate and getting a buydown, which means that they’re either getting a two one buydown and they’re starting off two points below or they’re getting a one one buydown and starting off one point below in the hopes that when interest rates come down in late 2024, early 2025, they can refi back into the lower interest rate. I mean, that’s totally feasible. When I bought my house, I did a buy down. I totally understand that. But is it right for you? I don’t know. Do you have enough money right now for a down payment? Can you actually move? What about your house? Is your house ready to sell or do you need to do repairs on it? Do you have the availability that if you do get a house at a seven, 7.25 interest rate and rates don’t come down, can you continue to pay that mortgage payment until rates do come down? If they do, these are all factors that you need to look into because if you do the buy down right now and rates don’t come down, at some point you will be paying that seven, 7.25, 7.35, whatever it is, interest rate in about one to two years in the future. And you need to be sure that you can comfortably afford that and it’s not going to stress you out. So in short, pay attention to what’s going on, talk to your realtor, get in with them so that as the rates come down, if they do that, you are in the position you need to be in. Find out what kind of money you need to have set aside to put down a good down payment so that you can get in with the monthly payment that you want, because that’s what’s important. Find out what your house price range is and do it at the higher rate. Don’t do it. Bank it on the fact that interest rates are going to be 5% and then find out that they don’t go that low or they don’t come down enough and you’re stuck with a house you can’t afford.
Just be really, really careful with all of this. It is always in your best interest to budget and anticipate that you’re going to be paying that higher interest rate. Don’t anticipate that it’s going to come down. So if you have any questions about this, reach out to me. I can put you in touch with a fabulous lender, talk to your financial advisor. Reach out to me if you have any questions about how this could work with the buydown, the interest rates, where the prices are going to go, and I would love to help you out. All right everybody, good luck out there.