The New “What did you do with your Z today” (with off topic replies)

vtec to vvel

The reason the Feds dropped the rates so low is to prevent from the economy crashing from COVID19 (i.e. quantitative easing). The low rates isn’t what made the market red hot, but rather the severe shortage of supply (stemming back from the housing crash in the late 2000’s), paired with global supply chain issues. Potential buyers shouldn't be so focused on rates alone, but rather getting a fair rate AND being able to find a home to get under contract in a short-supply environment.

The “wait and see” mentality is what separates the poor, rich, and wealthy (yes, there is a distinct difference between being rich and being wealthy). Real estate is one of the quickest ways to build wealth, and if someone has the means AND ability to buy, they should buy regardless of where rates are. There may be better times to buy, but there is no wrong time to buy real estate.

For example, Person A buys while rates are higher, but doesn’t have to deal with bidding wars, doesn’t have to offer anything over asking price, has the sellers even offer seller credits to offset certain costs (such as closing costs, discount points, repairs, etc.), isn’t expected to waive any contingencies built to protect the buyer, and has the ability to refinance to a lower rate when they drop.

Person B “waits and sees” until rates drop, which takes some time. And if rates did drop, they are having to offer over asking price just to even get their offer noticed (and still likely to get rejected to another higher offer), no chance of negotiating seller credits, is expected to waive certain/maybe all contingencies, and putting in 50+ offers and hoping 1 will get accepted.

I’ve done the math for plenty of clients, and 95% of the time, Person A will have spent way less money overall and not go through an emotional roller coaster (I've had grown-@$$ men cry in person because of the stress of putting in multiple offers and all getting rejected). Person A will also have built significant equity (i.e. wealth) compared to Person B who as only paid 100% interest and someone else’s mortgage by renting.

If people need to wait until rates drop to qualify, then they are not true qualified home buyers. Also, when rates dropped, this yielded to bidding/pricing wars, so someone that only qualified based on low rates would have been outpriced/outbidden anyway (this is where equity and wealth comes into play).

If we have another global pandemic, rates could absolutely drop down low again, though hopefully they know not to keep it as low and as long if that happened.

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