Lately, I've heard some buyers comment about waiting to buy a home until after the election. This got me to thinking, what is behind buyer's decisions to buy a home? Can an election affect the housing market? It seems to have put buyers on hold. If that happens, how does THAT affect the housing market? Many questions - let's come up with some answers.
Some buyers may be thinking that waiting until after the election is a wise move. But wait, aren't others thinking this way? What if those buyers are all waiting, sitting on the fence until after the election? Doesn't that create an even longer list of buyers waiting to buy? In my humble opinion, yes. But let's see what others are saying?
Reading research by John Burns Research and Consulting seemed like a wise homework assignment. John Burns Research was founded in 2001 and provides housing market research data.
According to their data, "the annual seasonal decline in home sales is no worse in election years than in non-election years, according to 35 years of data." But those that are waiting to purchase a home until after the election may be waiting due to "uncertainty and negative campaigning" which weigh heavily on consumer confidence. That makes sense. Waiting to make a decision until all the votes are in. Read on for more statiscitcs. But is it really a good decision to wait to buy a home?
Mortgage interest rates are set to drop thanks to the Federal Reserve's rate cuts. So with these rates set to drop in the very near future, wouldn't it seem wise that buyers would hop off the fences and decide to buy a house? Maybe or maybe not!
In the Phoenix area, sales prices have continued to rise on average, even during election cycles. This Cromford Report graph clearly shows the disparity between the average list price versus sales price during any season, elections or not. So if prices are still rising and interest rates are going to drop, wouldn't it be prudent to buy real estate sooner rather than later?
If you purchase a home today and rates continue to move lower, you could extend your closing date and wait to lock a rate or decide to refinance later while you've already nailed down a sales price for a home. The return on investment for refinancing is typically 2 to 3 years, depending on the interest rate reduction. It's not likely we'll ever see a 2% mortgage interest rate again. This graph reflects 40+ years of mortgage interest rates.
Demand will pick up when mortgage interest rates drop and home prices will rise as more buyers come off the fence since demand will increase. And increasing housing prices will also increase the size of your down payment. Therefore, it seems prudent to purchase a home sooner before the headlines reflect new mortgage interest rates.
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