The state of the housing market
Consumer prices rose by 0.2% in October, according to the U.S. Bureau of Labor Statistics, bringing annual inflation to 2.6%, close to the Fed’s 2% target.
On Nov. 7, Fed Chair Jerome Powell announced the second rate cut this year, slashing the benchmark federal funds rate by 0.25%. And on November 12 the rate stayed the course. “Overall, [we’re] feeling good about economic activity,” Powell said during the post-meeting news conference last week.
It’s the kind of news that may give prospective homebuyers pause. If you’re in the market but aren’t sure if now is the right time because of a Fed rate in flux, you can seek advice from professionals through Advisor.com.
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While rate cuts may not immediately lower mortgage rates, many experts expect they’ll boost housing demand, which could drive prices up. Freddie Mac noted that high mortgage rates had “led some prospective buyers to step back,” but a drop in rates could spark a “significant surge” in demand, especially from first-time buyers. They forecast home prices to increase by 2.1% in 2024 and 0.6% in 2025.
What can homebuyers do?
The starter home market is “crazy,” says Corcoran. “There’s so much competitive bidding, so much going over the price and so much fear going around because people feel like they can't get ahead.” That’s why waiting to buy may not deliver the win you want.
“Wait until you see what happens with prices when interest rates come down another percentage point,” she told Bloomberg. If you are considering buying a new home, you need to know your options. Freddie Mac suggests getting mortgage quotes from three to five lenders. This will help you snag the best mortgage rate possible.
Borrowers who received two rate quotes saved up to $600 annually, according to 2023 research from Freddic Mac. That number rose to $1,200 annually for borrowers who visited at least four rate quotes from different lenders.
If you want a quick and efficient way to do this, Mortgage Research Center (MRC) can help you quickly compare rates and estimated monthly payments from multiple vetted lenders. All you have to do is enter some basic information about yourself, such as your zip code, your desired property type and price range and annual income.
Based on the information you provide, MRC will show you mortgage offers tailored to your needs so you can shop for a mortgage with confidence.
After you match with a desired lender, you can set up a free, no-obligation consultation to see if you’ve found the right fit.
Alternatives to buying property
Sadly, we don’t all have the money to jump into the housing market at a specific time like when the Fed rate drops. If what Corcoran is hinting at turns out to be true, and lower rates catapult market demand all over again, companies like Cityfunds offer a smart alternative for those hesitant to jump into an overheated housing market.
As a real estate investment platform, Cityfunds allows individuals to invest directly in the future value of owner-occupied homes without needing to buy property outright. As these homes appreciate, your Cityfunds equity investment grows alongside the homeowner’s.
Operating in sought-after major markets like Austin, Dallas, Miami, Tampa, Denver, Phoenix, and Nashville, Cityfunds even offers the potential to invest in homes close to you. With a minimum investment of just $500, you can access the $20 trillion home equity market — bypassing steep home prices, costly mortgages, and the complexities of property ownership.
In a Fed rate-cutting cycle that could drive up demand and make real estate harder to attain, the Arrived Private Credit Fund is another alternative real estate investment that gets you in on the lending side of the building business.
This fund invests in supporting professional real estate projects, such as property renovations, rehabs, and new construction, all secured by residential housing. Loan periods range from 6 to 36 months, and returns are generated through monthly interest payments distributed directly to investors.
With a low minimum investment of $100, the fund has historically yielded 8.1% annualized dividends and aims to deliver 7-9% in cash returns. It features quarterly liquidity, a diversified pool of real estate-backed loans, and monthly dividend payouts, making it an attractive income-focused option with security from real estate collateral.
Determined homebuyers, on the other hand, have two choices: wait and try to time the market, or jump in now, endure short-term challenges, and potentially refinance if rates drop.
If you do end going the refinance route, Mortgage Research Center can also help you shop for a better rate.
Just answer a few quick questions about your current home and loan, and MRC will you show you rates from multiple lenders so you can make a decision with confidence.
For those who can afford it, entering the market before demand spikes might make sense. Rising home prices would build equity, and even if prices stay steady, there’s a better chance of landing a desired home without a buyer frenzy.
