The market stats confirm what we already know – the real estate market in Chaffee County, like that nationally, is cooling. This cooling is being driven by the recent rise in interest rates.
Buyers are naturally sitting on the sidelines a little more than in previous years, likely waiting to see whether rates will continue to rise and whether prices will continue to fall.
Most economists predict the market will continue to be slower than in the last several years, but a significant crash as witnessed in 2008-2009 is highly unlikely. The reasons for this are a continued shortage of supply, strong employment and the eradication of lending practices that led to the subprime disaster.
As inflation begins to fall, so too are we seeing the beginnings of a decline in interest rates.
At one point these were above 7 percent but have now dropped down into the lower 6 range. While still much higher than the 2-3 percent range of a year or so ago, today’s rates are still well below the historical average. Laurence Yun, chief economist for the National Association of Realtors, expects to see mortgage rates drop below 6 percent in the not too distant future.
Many buyers adopting a wait-and-see approach are hoping to “time the market.” The one problem with this approach is that you never know if you have timed the market until after the event. Hindsight generally discloses this involved a combination of dumb luck and the courage to pull the trigger as much as anything.
Deciding when to buy a home has many similarities to deciding when to start a family. In reality, there is often no perfect time – you just get on with it and deal with the consequences.
There is one area where taking on a mortgage does have an advantage over becoming a parent – you can trade in your mortgage in the future when a better one comes along, something that is generally frowned upon with offspring.
So if now seems the right time in life to be buying a home, consider taking advantage of today’s lower prices and sellers’ greater willingness to negotiate, and trade the higher-interest mortgage in for a lower one when the market turns and prices begin to climb again, which they surely will.
Hayden Mellsop is a board member of the Realtors of Central Colorado.
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