Real estate is cyclical, every year buying and selling slows down as the holidays approach. That combined with historial high home prices coupled with interest rates hovering around 7%, makes home buying seem not very appealing. There’s plenty of Realtors out there saying this is a GREAT time to buy, and that’s simply just not true. However, there ARE some major pro’s. Let’s talk about that!

My name is Greyson Roberts and I am a Realtor and owner of BOSS Properties. BOSS Properties provides real estate education, entertainment and sales services. If you’re looking to buy, sell or invest in the greater Springfield, MO area or beyond, don’t hesitate to give me a call/text. 

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I personally like to start with the con’s. So, let’s briefly go over the obvious reasons to NOT buy a home right now.

Cons

Home Prices

This actually surprisingly isn’t as big of a con as it used to be. Home prices are beginning to see some reductions nationally due to the other reasons we will discuss. However, that doesn’t mean real estate is cheap. Not to mention, if you plan on buying a home and moving out within the next couple years, there’s a good chance you could lose money. 

Dave Ramsey keeps preaching home prices will continue to rise, hell, even the National Association of Realtors is saying prices will continue to appreciate 5% more nationally. I don’t see how that’s possible. Home prices are still at historic levels, however, coming down. 

Interest Rates

Interest rates have been hovering around 6-7% at the time of me writing this. Did you know that with every 1% interest rate increase, your purchasing power decreases by 10%? Interest rates can easily, and I mean EASILY, be the only determining factor on if you qualify for a home or not. If you qualified for a $500k home in 2020, you may only qualify for a $300k home now! Interest rates, however, are temporary. You can ALWAYS refinance when rates drop, thank god. 

Now, let’s talk about the pros of buying a home. Now, there are many, many wants, needs and strategies behind home buying. Investors simply look at the numbers. If it works, it works! Maybe an elderly couple is looking to buy cash, so interest rates couldn’t matter less. Possibly, you find your dream home and plan to live there the rest of your life.

Well, as long as you get a fixed rate mortgage, you’ll lock in your mortgage for life! Maybe, you don’t have a choice on when to buy your home. Maybe you’re relocating for work, family, downsizing, etc, and you just want to know what you’re getting yourself into. There’s many, many situations out there so be sure to give me a call or text and I’ll answer any questions you may have. 

Pros

Leverage for negotiations

With high home prices and rates, you’ll be seeing a MASSIVE decline in competition. I am writing this in December 2022, what I believe will be a historically low transnational period for real estate. You bet your ass if you find your dream home/ investment, you’ll be able to get even lower than the price reduced asking. If nobody simply wants to buy and the seller is motivated, you’ve got your run of the place!

No more are the days of paying $50k over asking and waving inspections. The roof only has 3 years of usable life left? Now, you can actually ask to have it replaced or receive a credit. Maybe, if you’re lucky, the sellers are getting desperate to move their property and will simply take the below asking offer. It’s happening every day in my local market!

If you’re a cash buyer, you have even more leverage. Most buyers are sitting on the sidelines simply because the rates have pushed most homes out of budget. However, if you’re paying cash, you don’t care about rates! Not to mention, you can close on cash deals much quicker because you don’t have to wait for the lender. 

Buying a property that’s not moving on the MLS with cash and a 10 day close could lead to some serious discounts! Now, I understand most people aren’t cash buyers, however, many are. If you didn’t already know, you’ve got some SERIOUS leverage, especially right now. 

Refinancing

A lot of folks don’t realize that when you buy a home, you can always renegotiate your mortgage after a seasoning period of about 6 months depending on your lender. This is known as refinancing. For example, if you lock in a 30yr fixed rate mortgage at 7% today, and rates drop to 4% in the next 6 months, you can refinance your mortgage into that new 4% rate, saving you HUNDREDS of dollars PER MONTH. 

Marry the house, date the rate. Essentially, this means, who cares about rates today if you can qualify? This can be wonderful news for those who don’t have an option but to buy a home in the current climate. Now, this will cost you about 1-3% of the total loan value. Luckily, you can usually find a lender that will take this amount onto the loan. Meaning, a significant rate drop could still lead to major savings after refinancing. 

Home Prices

Although nationally on average homes are declining in value, this will bottom out rather quickly simply due to supply and demand. If you bought a home today and sold it in 2 years, you very well might lose money. However, if you bought a home today and sold in 7 years, you will most likely STILL come out ahead. Real Estate appreciates at about 6% per year on average (unless it’s 2020-2022, then more like 30%!). 

Moral of the story, real estate is a long term game. Unless you’re a house flipper, there are deals out there still worth having. Just hire yourself a competent Realtor that’s not just going to sell you the most expensive listing that will decline 20% in value over the next 24 months. Knowledge of the real estate market is everything, and we’re free!