Real Estate Trends: Sarah Leonard's Insight

Real estate goes beyond just transactions—it's about understanding people, timing, and finding the perfect fit. Whether you’re an experienced homeowner or venturing into your first purchase, navigating today’s market can be daunting. Recently, on Home Sweet Home Chicago, I had the chance to dive into the latest trends, surprising insights, and what lies ahead for buyers and sellers.

Is it a Good Time to Buy?

A listener called in, worried about whether his son should wait to buy a home. His advice had been to save 20% down and wait for better market conditions. Sarah had a different take, stressing that there’s no one-size-fits-all approach to buying a home. She explained that buyers could secure a home with as little as 3% down through FHA loans or even explore other options like USDA loans. In today’s market, the pendulum has swung toward buyers, meaning that holding off might not be the best advice for everyone. Sarah's message? If you're ready to buy, don’t wait for perfection—act while opportunities are still within reach.

Why Waiting Might Not Be the Best Idea

Waiting for "the perfect time" can often lead to missed opportunities. Over the past few years, buyers who chose to wait may have seen home prices rise and interest rates fluctuate. While hindsight is 20/20, Sarah emphasized that securing a home now could be the smarter move. As she mentioned, you can always refinance your mortgage rate when it improves, but you can’t always lock in the same home price.

The Current State of Pending Home Sales

Pending home sales have been trending downward for 23 months, and Sarah pulled up some eye-opening data. In Schaumburg, Illinois, a large Chicago suburb, there were 76 pending homes at the time of our discussion, compared to 137 the previous year. That’s a significant drop. But it’s not due to a lack of demand—it’s a lack of inventory. Simply put, buyers want homes, but there aren’t enough available.

Why Are Sellers Holding Off?

Many potential sellers are holding back because they secured low mortgage rates during the past few years. With rates now hovering around 7.25%, homeowners with 3% rates are hesitant to move, even though they have significant equity in their homes. But Sarah predicts that if rates stabilize in the 5% to 6% range, it could push sellers to make a move.

For every 1% drop-in interest rates, homeowners can save significant amounts on their monthly mortgage payments, which could be the push they need to list their homes.

The Role of Adjustable-Rate Mortgages (ARMs)

In the past, adjustable-rate mortgages (ARMs) were a popular option for buyers, but they've fallen out of favor in recent years. However, Sarah believes ARMs could make a comeback as rates become more favorable. When homeowners realize they can lock in a rate at around 5.5% on a 30-year fixed mortgage or even lower with an ARM, we could see a surge of new listings hit the market.

What Rate Will Get You Off the Couch?

One of the big questions of the day was: What will it take to get homeowners to sell? With 70% of homeowners in the area locked into rates under 5%, what kind of rate would entice them to sell and buy another home? Many are waiting for that "magic number," but as Sarah pointed out, it might only take a drop to the high 5% range for the floodgates to open.

For every $100,000 borrowed at 7.25%, homeowners are paying roughly $682 per month. But if rates drop to 6.25%, that payment goes down to $615. Over a year, that adds up to significant savings.

Looking Ahead: A Market on the Verge of Change

As we look to the spring of 2024, there’s hope that interest rates could fall to the 5% to 6% range, creating a more favorable environment for both buyers and sellers. The key takeaway? The market is always shifting, and while it’s important to be financially prepared, timing your move can be just as important.

In real estate, staying informed and knowing when to act is key. Whether you’re buying or selling, Sarah Leonard's expertise can guide you in making the right choices for your situation.

Are you ready to make your move? Let’s chat!

Contact Sarah Leonard
Phone: 224-239-3966
Email: sarah@sarahleonardsells.com