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Fischer: Resolving in the new year to think more, regret less

By Jen Fischer - Special to the Standard-Examiner | Dec 29, 2023

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Jen Fischer

"And bad mistakes/I've made a few ..." So says Freddy Mercury, lead singer for the legendary rock band Queen in the song "We Are the Champions." With the new year quickly approaching and as new beginnings, aspirations, goals and intentions are being set for the year, it is natural to look back and reflect on the old with a few regrets. I've had a few, primarily when it comes to opening my mouth and inserting my foot. I live in a space of true awkwardness in this manner. I am aspiring to think more before opening my mouth this year.

Many people have regrets. However, they are only useful if we can acknowledge them and move forward by having learned from them. As it turns out, a large throng of homeowners who made hasty purchases during the great pandemic rush a couple of years ago have some serious regrets. These were times when buyers were overbidding by tens of thousands of dollars on homes and waiving inspections and appraisals in the desperate attempt to have their offer accepted over the competition, which was fierce and aggressive.

In fact, according to one survey from Hippo, a home insurance group, more than three-fourths of homeowners in the U.S. who purchased during this time have some specific regret surrounding their decision. The primary reason for the contrition is feeling like they spent too much for the home. Many also felt rushed. In reality, they were. If the decision wasn't made within hours, the house would be gone. There was no time to sleep on it, mull it over, or make a list of pros and cons. The real estate industry was experiencing record-breaking low inventory and the housing shortage was becoming a crisis.

Fast forward a year and some change, rapid interest rate hikes slowed the buying frenzy down dramatically. However, the need for housing has not changed. Instead, buyers have slammed on the brakes and have decided to hold off until interest rates drop. Recently, ING Economics predicted that the Federal Reserve plans to cut rates six times starting in the second quarter of 2024. If I'm doing the math correctly, that puts us at about April for interest rates to start plummeting. However, if that is truly what you are waiting for ... hold your proverbial horses. There is a very big postscript to this front-page news.

First, when the Federal Reserve raises or lowers rates, it doesn't directly impact mortgages. Since mortgages are tied to the 10-year Treasury yield, it is not a direct effect. Mortgage rates don't just drop when the Fed changes rates; they actually tend to go up and down ahead of Fed policy moves.

You may have noticed that interest rates have already been softening; however, buyers, surprisingly, are still waiting. Here is what we know for certain -- nothing. It is emphatically impossible to predict what rates will do in the future. However, it is highly unlikely that rates will drop to 3% again in my lifetime (granted, I'm more at the back end of that lifetime rather than the front). In my lifetime, which has been fairly long to this point, I have never seen them that low. If the past predicts the future, which it often does, we will not see them that low again for decades if not centuries.

By combining all these facts, we can make a logical decision about the "best" time to buy. If you wait for further interest rate drops, which may or may not happen, this likely will put you in the market at the same time as everyone else, which means competing on available listings. Remember, we are still in a housing shortage. The price you end up paying for a home will not change, but interest rates will. In this market, there is almost 100 percent more negotiating power than we had a couple of years ago. Either way, make an informed decision. It's going to be a great year for real estate (as well as thinking before speaking). Bring it on!

Jen Fisher is an associate broker and Realtor. She can be reached at 801-645-2134 or jen@jen-fischer.com.


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