Hello and welcome, or welcome back to the channel, wherever you are viewing this video. These are the two reasons, the two main concerns, I hear home buyers are not wanting to move forward on a purchase in today’s market. And these are qualified home buyers. These are buyers that can afford today’s payment. They’re just choosing to, say, sit back, sit on the sidelines, and not purchase.
So the first one being interest rates. I hear, “Hey, we want to wait for the interest rate to come down,” which I understand, I appreciate that. However, when we see interest rates come down, I think we’ll see more competition, more activity in the market. That, I feel, will drive up home prices. So I think if you wait for lower interest rates in the future, A, who knows if and when your offer’s going to get accepted if you have more competition in the market, and then I think you’re going to be seeing home prices be bid up with that competition, with more competition in the market.
And that leads me to say the second reason is the lack of inventory. And that unfortunately is something I don’t foresee changing. I foresee there being a lack of inventory here in Southern California and across the US for really the foreseeable future. We had over a decade of not building nearly enough homes to keep up with population growth. So that’s one of the reasons why I don’t foresee inventory changing as we are nowhere near catching up to the building that needs to occur, as well as we have a lock-in effect. We have all these homeowners that currently have mortgages with these historically low interest rates and they don’t want to give them up. So instead of moving, they are perhaps adding onto their property, they’re adding a pool in their backyard, rather than selling their current and then, say, buying another. So we’re calling that in the industry the lock-in effect.
And those are two of the many reasons I don’t foresee the inventory issue changing a whole lot. And if you’re able to get in, obtain the property that you’re wanting long term for yourself as an investment or say for your family, and then in the future where interest rates go down, hopefully they do so next 12 months or so, now you have the opportunity to take advantage of that lower interest rate and you’re not in, say, the rat race of the more competitive environment we’re more than likely see once interest rates do come down a bit. So those are the top two reasons I hear, or kind of the top two concerns. And if you have questions, perhaps that’s a concern of yours, would love to discuss things more with you. Either way, thank you for spending a few minutes with me here today. Take care.
Senior Loan Originator
Over the past 15 years as a mortgage professional, closing on average 150 loans per year, I have gained a wealth of knowledge and experience about the mortgage industry. My goal with this website is to give you just the INFORMATION you need about mortgages with ZERO sales pitch. I hope you find my posts of value and share it with 1 other person who might find value in it as well.