In the last two days we have experienced some downward movement with Interest Rates. The overall feeling is the Fed will lower rates very guardedly with the emphasis being watching for any type of pickup with inflation. So far, the Fed has been very diligent, but it is a tightrope walk with balancing inflation versus slower economic growth.
One thing is for certain…time marches on! We have all have experienced a wide range of different opinions regarding the economy, real estate, world politics, the upcoming elections etc… In addition, we can all draw upon historical personal perspectives and long-term economic cycles, but want to share something we read a few days ago that resonates with our Real Estate industry at all price points.
“In 1971, the interest rate for a residential mortgage (nationwide) was 7.33%. If one waited for interest rates to track down significantly, the chances are one wouldn’t have purchased a home until 1993. This concept extrapolates that one would have rented for 22 years waiting for rates to go down, while in the meantime the value of real estate quadrupled. We think the mantra is—Don’t wait for the market to cycle and reach for a “bottom” in rates. The cliche is, “Marry the house, date the rate.”
Important to filter into your thought process–When rates move down there is tremendous amount of pent up demand from buyers at all price points who will compete for existing home products. Historically this means an increase in sale prices. In addition there is a tremendous amount of liquidity waiting on the sidelines to place in Real Estate vehicles. Most of us would like a mortgage in the 3%-4% range which we all became used to in the last few years. That being said, we live in a fluid real time continuum and need to position ourselves in the here and now—Assuming one has the ability to step up to the plate. Don’t procrastinate and wait for a lower rate which may or may not occur. Be realistic with what one can afford and what one can’t. If prices are too high in a certain area, we suggest one branches out and expand the parameters into different markets that one would be willing to entertain. The bottom line is we all need to be realists and temper expectations based on what one can afford and what one can’t. None of us need additional stress in our lives.
Important, there are a number of alternative loan programs for qualifying purposes in addition to the traditional mortgage platforms. These programs are created to help the self-employed qualify. It is now possible to qualify for a transaction based on cash flow from bank statements, rental income or additional strength provided by a non-occupant co-borrower. Please reach out so we can review in detail & run some numbers with you.
In addition, many of our commercial real estate clients have been discussing with us their current mortgage is either rolling after the initial fixed rate period or maturing. The environment is quite challenging at the moment and we are assisting clients with deal restructuring and advising on how to retain properties. At the end of the day, do not wait until 60 days before an event. Give yourself four to six months to work on this in order for us to find a new lender or work with the existing lender on your behalf.
Once again, we are always here for you and welcome your contact anytime!
Stay Tuned!
Personal Regards,
Gloria, Curtis, Ted, Coby, David, Ben and All of us at Centek Capital Group
Leave a Reply