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Phil Immel

By Phil Immel

Question: I am thinking about buying a house in the next two years. How can I ‘time’ the market for the best deal? – Samantha A., San Clemente

Answer: Dear Samantha, Everyone would like to ‘time’ the market and buy ‘right’. Like the stock market, there is no secret formula. Here are some key factors to consider.

Real estate seasonality is the annual cycle in which buyer demand fluctuates. Ideally, buy when you have less competition. The best months are January and October-December. December is a prime month because most shoppers are busy from Thanksgiving to New Year’s.

It’s usually slow on Super Bowl Sunday. The second and third quarters are the most competitive months, with DST starting in March. The rainy season is fading, flowers are blooming and spring is in the air.

From March 2022, the Fed began to rapidly raise interest rates to fight inflation. Mortgage rates went from 3% to over 7%. In October, buyer availability decreased and demand decreased. But buyer demand is still strong and growing steadily.

In my previous column, I predicted that mortgage rates would soften to around 5.5% by July. Why? Because the Fed overreacted by raising interest rates this past year, which hit the housing market the hardest.

The number of homes sold dropped by almost 50% from 2021 to 2022. Real estate is about supply (listings available) and demand (qualified buyer demand). When prices more than doubled in six months, it blocked many buyers from qualifying for a home. As interest rates drop from more than 7% to 5.5%, this will open the door for buyers to requalify.

Just as sales dropped by almost 50%, so did the number of listings (inventory). Why? More than half of homeowners have refinanced their homes with the lowest interest rates in decades.

Why would owners sell and buy a new home to double the interest rate and double or triple their property taxes? They probably wouldn’t, but there are always exceptions like divorce, death, and moving to tax-free states.

Less inventory and buyer demand will keep home prices stable. Many buyers say: “I’ll wait until the market crashes and then buy.” Many economists and so-called “experts” are convinced that this year the prices of apartments will decrease by 20-30 percent. I do not agree. Their models bear little relation to the reality in our coastal market.

Previous experts’ predictions have often been wrong. Because of this, buyers are confused about the timing. Home is home. It is a commodity, like a share certificate. Homes have real value and are often the largest asset in a person’s life, creating wealth and an enhanced retirement.

Ask your parents what they paid for their house 40 years ago. It’s probably worth at least 10 times that now.

Real estate values ​​and interest rates move slowly. Don’t expect rates to drop back down to 4% or less. It happened because of COVID.

In my 40+ years of selling homes, I have seen mortgage rates go from 2.5% to 18.5%. Believe it or not, interest rates below 6% are a relative bargain based on historical data. Another benefit is interest reduction on loans up to $750,000.

As a young family starting out, get serious about buying a home this year. Get pre-approved for a loan. Hire an experienced realtor and be ready to take flight in the coming months.Have a real estate question? Mail to Phil Immel phil@realestateguru.com. Visit realestateguru.com. Guru has over four decades of experience listing and selling homes in South Orange County. As a licensed real estate broker, Phil majored in real estate at San Diego State University and is also an expert in mortgages, title, escrow, appraisals and negotiations.

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