Two Questions To Ask A Hesitant Buyer And Inspire Confidence In Buying

If you’re clients are thinking of buying a home, chances are they’re paying attention to just about everything they hear about the housing market, and getting their information from a variety of channels: the news, social media, conversations with friends and loved ones, overhearing someone chatting at the local supermarket, the list goes on and on. Most likely, home prices and mortgage rates are coming up a lot. 

To help cut through the noise and give them the information they need most, take a look at what the data says. Here are the top two questions you should be having your clients ask you about home prices and mortgage rates as they make their decision: 

1. Where Do I Think Home Prices Are Heading?

One reliable place you can turn to for that information is the Home Price Expectation Survey from Pulsenomics – a survey of a national panel of over one hundred economists, real estate experts, and investment and market strategists. 

According to the latest release, the experts surveyed are projecting slight depreciation this year (see the red in the graph below). But here’s the context you need most. The worst home price declines are already behind us, and prices are actually appreciating again in many markets. Not to mention, the small 0.37% depreciation HPES is showing for 2023 is far from the crash some people originally said would happen.

Now, let’s look to the future. The green in the graph below shows prices have turned a corner and are expected to appreciate in 2024 and beyond. After this year, the HPES is forecasting home price appreciation returning to more normal levels for the next several years.

So, why does this matter to your clients? It means their home will likely grow in value and they should gain home equity in the years ahead, but only if they buy now. If they wait, based on these forecasts, the home will only cost them more later on.  

2. Where Do I Think Mortgage Rates Are Heading?

Over the past year, mortgage rates have risen in response to economic uncertainty, inflation, and more. We know based on the latest reports that inflation, while still high, has moderated from its peak. This is an encouraging sign for the market and for mortgage rates. Here’s why.

When inflation cools, mortgage rates generally fall in response. This may be why some experts are saying mortgage rates will pull back slightly over the next few quarters and settle somewhere around roughly 5.5 and 6% on average.

But, not even the experts can say with absolute certainty where mortgage rates will be next year, or even next month. That’s because there are so many factors that can impact what happens. So, to give your clients a lens into the various possible outcomes, here’s what they should consider:

  • If they buy now and mortgage rates don’t change: They made a good move since home prices are projected to grow with time, so at least they beat rising prices.
  • If they buy now and mortgage rates fall (as projected): They probably still made a good decision because they got the house before home prices appreciated more. And, they can always refinance their home later on if rates are lower.
  • If they buy now and mortgage rates rise: If this happens, they made a great decision because they bought before both the price of the home and the mortgage rate went up.

Bottom Line

If your clients are thinking about buying a home, they’ll need to know the facts on what’s happening with home prices and mortgage rates. While no one can say for certain, expert projections can give us powerful information to keep us informed. Stay plugged into your market and be the best resource for your clients that you can.

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