Buyers: Stop Waiting for Ultra-Low Rates to Return and Seize New Opportunities
In Sarasota and the surrounding areas, many aspiring home buyers are holding out for mortgage rates to fall before making a move. According to the National Association of REALTORS®’ “2024 Member Profile,” about 20% of real estate professionals say this is one of the biggest factors limiting real estate transactions lately. However, the super-low rates of the past – like the 2% and 3% rates during the pandemic – are unlikely to return anytime soon.
Federal Reserve Chair Jerome Powell remains committed to keeping interest rates high until a return to 2% inflation, which he believes will aid a broader economic recovery (as of this week, the consumer price index was 3%). “The best thing we can do for the housing market and the economy is to sustainably bring inflation down,” Powell stated.
In Sarasota, Freddie Mac reports that the 30-year fixed-rate mortgage has been hovering near 7%, averaging 6.89% this week. Five years ago, rates were in the 3% range. Jessica Lautz, NAR’s deputy chief economist, emphasizes that waiting for ultra-low rates is likely futile. At this week’s 6.89% average, home buyers with a 20% down payment on a $400,000 home in Sarasota would have a monthly mortgage payment of $2,105; with a 10% downpayment, the payment would be $2,369.
New Opportunities for Buyers: Rates Fall, Supply Rises
A recent report from Redfin highlights new opportunities for buyers. A homebuyer on a $3,000 monthly budget can afford a $447,750 home with a 6.85% mortgage rate, gaining $22,500 in purchasing power since mortgage rates peaked in April. The current rate drop, influenced by cooling inflation, presents a sweet spot for buyers before competition picks up.
Despite declining rates, home prices remain high, and total housing costs are historically high. However, the good news for buyers is the rising inventory. New listings are up 7% year over year, and the total number of homes for sale is near its highest level since late 2020. Many homeowners, locked into ultra-low mortgage rates, are now listing their homes, increasing the supply.
Homes are also staying on the market longer, with over 60% of homes listed for at least 30 days without going under contract, compared to 50% two years ago. This gives buyers the chance to negotiate for lower prices and other savings like home repairs or closing costs.
Redfin Chief Economist Daryl Fairweather notes, “The combination of declining mortgage rates, rising supply, and a lot of inventory growing stale means buyers have a window where they have more purchasing power and more homes to choose from. But this window may not last long as declining rates could soon bring many homebuyers back to the market.”
Conclusion: Seize the Moment in Sarasota’s Housing Market
For buyers in Sarasota, the current economic climate and rising home inventory present a unique opportunity. While ultra-low rates are unlikely to return, the combination of falling mortgage rates and increased purchasing power makes this an ideal time to make a move. Embrace the opportunities in the Sarasota housing market and secure your dream home today.
