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INTEREST RATES ARE COOLING! LOWER? Not as high. MIDDLE-ISH? Kinda Affordable...

It’s almost like you need a coach to help you train for and win in this market. I actually do coach real estate professionals on how to stay mentally strong and use their Mind over Markets. The past few weeks got me thinking about how buyers need a coach right now too. Not just a realtor to find them a house and negotiate the best deal and not just a lender to put together the best financing strategy. Winners, the best athletes in the world, the most successful business men and women – they are mentally tough. Why wouldn’t this apply to homebuying too? I mean, we all know it feels like the Hunger Games out there. Buyers need help knowing how to block out the noise. How to focus on the numbers that matter, how to handle conditions that change hourly and most importantly, how to keep their head straight so they’ll know when it’s the right time for them specifically to strike.

Rates hit the highest point of my career in the past month. The last time rates were between 7 and 8% was 2002. Back then, there was not an inventory shortage. Meaning home prices could - and in some markets did - cool a bit to balance out the higher rates. Obviously, that’s not what we are seeing this time around. Plus, we are dealing with whiplash from rates being at historical lows and then less than 24 months later, at a 20 year high. My advice to you all was to use a special kind of waiting strategy where you weren’t sidelined until rates hit 5% and every buyer came back to the market blowing prices right back out of the water. My advice was and is that you need to know exactly what rates need to be for you to qualify (based on both my standards as a lender but also your comfort level). For example if when rates hit 6.5% again you can qualify, you need to be watching for 6.5% like a hawk. You should not mail it in until the media tells you rates are low because by that time, it will be too late.

What will rates do in the coming months?

Markets, buyers and lenders across the country are rocking back and forth wondering if the Fed will proceed with a rate hike in November. We’ve discussed here that the biggest hope for this hiking campaign to finally end would be a weak labor market. That’s been a sore subject because headline jobs numbers have been big and braggy but when one digs into the data, a less celebratory picture is revealed. Yet a “strong jobs market” in spite of rising rates gives the Fed the footing they want to continue hiking rates to combat inflation. Inflation must come down and if Americans can still find jobs, then the Fed should keep being aggressive.

Today we saw a jobs report that started to allude to the truth. Unemployment rose to 3.8%. While 187,000 jobs were added in August, revisions for June and July’s numbers brought those previously reported numbers down by over 100k. So similar, large revisions could be expected on August’s numbers. You might remember (I still have nightmares) that June’s original jobs number came in showing 209,000 jobs added. Now that reading for the same month is down to 105,000 jobs actually added. August also showed that full time workers fell by 85k and many more individuals looking for work. This leaves the markets betting on a pause from the Fed, which would be welcomed in our space.

The media won’t tell you this, but interest rates are backing down from the 8% door. With a reasonable amount of points, you can still lock a 30-year fixed with a 6 handle assuming you have good credit. I did just that for several borrowers this week.

Let’s go back to using your Mind over Markets.

The right time to buy has never, in my opinion, been based on the market. It’s based on when it’s the right time for you, your family and your finances. Look, I sure wish I wasn’t in middle school during the Great Recession and could have bought real estate at a massive discount. It wasn’t the right time for me because I was more concerned with making my huge nose fit my face. You can’t time the market. You can prepare yourself, educate yourself and train yourself to identify opportunities though.

I’ve put together a free homebuyer guide on how you can do this. Just in time for our monthly Housing Opportunities webinar coming up this Wednesday. My team hosts this 30-minute webinar on the first Wednesday of every month so that we can provide a market update coupled with the strategies we are seeing work in real time for buyers. If you aren’t in the loop on these, you need to be and you can register here. On this month’s webinar, I’m going to share this new homebuyer guide in hopes it will help buyers not rip their hair out trying to buy a house in today’s day and age.

PS Tickets for the Future is Female are now available! Learn more about this event here.

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