Should you wait for rates to fall before you buy?

Our friend Hannah Swihart, a Lafayette, IN colleague shared these thoughts:

So how do we answer the question... "I heard rates are going down to 4.5%?"

1. Every year there is always a forecast of how rates will be incredibly low. Usually this doesn't occur,  BUT now might be different.

2. Remember housing started the economic cycle and therefore housing WILL have to be the one item that pulls us out.

3. Yes, there is more talk than usual of having the Fed's help create lower mortgage rates.

4. Creating lower mortgage rates is difficult and will take very smart people to figure that out and the cost could be staggering.

In the meantime if you are a buyer hitting the brakes and saying "I'm waiting for my personal bailout with the 4.5% mortgage rates"

This might be a bad idea. Remember to look at all options.

1. IF rates fall to 4.5% - what happens... Demand will go up, FAST!

2. If demand goes up fast - what happens... Supply will go down, FAST!

3. What happens when the demand goes up fast and the supply goes down fast...Prices will rise!

So, what is the smart thing to do?

A.) You could buy a home now (American Real Estate for the first time has a was / now price just like a clearance sale at the mall...used to be $380,000 NOW only $245,000)

B.) Use the low rates we just inherited (mid 5% for many buyers)

This is the guarantee part - buy home now at low price with low rate!

Just remember we never really know when the bottom will hit but what goes down must go up and once it hits bottom it will rise faster than it went down.

Thanks, Hannah!