Getting buyers off the fence in the new year

by Meg White

With limited inventory and rising interest rates, clients who have been thinking about buying a home in 2019 may feel cautious about jumping in. In fact, Fannie Mae’s most recent Home Purchase Sentiment Index recorded a 12-percentage point decrease in the net share of Americans who feel it’s a buyer’s market. “Consumer attitudes regarding whether it’s a good time to buy a home worsened significantly in the last month, as well as from a year ago, to a survey low,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

But from the perspective of Ryan Gable, CEO and founder of StartingPoint Realty, a local brokerage with offices in Chicago and Schaumburg, the issue is more about the need to educate clients on which numbers to watch. “Buyers were spooked by a rise in mortgage interest rates, but this was more of a psychological reaction than a practical one,” Gable said, adding that the first month of the New Year may offer the best market conditions buyers have seen in some time. “When you combine a slowing market with the seasonal advantages of winter home buying, it gives buyers a much stronger position. Buyers who previously dropped out of the market should get back into the game.”

For numeric evidence, Gable suggested agents use the ups and downs of Freddie Mac’s weekly mortgage survey to demonstrate the larger picture to their clients. The average interest rate on a 30-year, fixed-rate mortgage was 4.60 percent in mid-September. In October and November, the same mortgage averaged near 5 percent. By the second week of December, the average rate was back down to 4.63 percent. When comparing the highest and lowest averages from September 13 through December 13, the maximum rate difference was 0.34 percent.

“Buyers need to remember that mortgage interest rates are only part of the picture,” Gable said. “The media can paint a scary picture, but talk to a lender, find out where you land in the affordability scale. Historically, we’re still in a great spot.”

So why should buyers get moving now, during what are generally the darkest and coldest weeks of the year? Gable says qualified first-time buyers could miss out if they procrastinate. “Home prices ease off in the autumn and winter months, but they spike up in the spring, when buyer traffic is the heaviest,” Gable said, adding that if agents can show their clients the ropes when it’s slow, success will come easier. “Real estate professionals must make efforts to educate home buyers.”

And it’s not just an exercise that will benefit a select few buyers’ agents. Gable says this type of increased activity can ripple out to improve the health of the Chicagoland real estate market: “When you contribute to the success of first-time home buyers, you contribute to the vitality of local neighborhoods. You strengthen communities and support local economies. First-time buyers are tomorrow’s home sellers, move-up buyers, and investors. They are the lifeblood of the market.”

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