Reading Crain’s today, the front page says “Home Sales Show Spark”. Perhaps buyers are starting to realize that it doesn’t make sense to wait if they are ready to buy a home. Interest rates are so low it is unlikely they will go lower and, if rates go up, it will make the effective price of their home higher since their payment is higher.
An interesting relationship between rates and prices is that at a 5% rate, if rates move by one percentage point (100 basis points) it is effectively the same as the price moving 10% or more! Thus, even if there is a possibility that prices may drop a bit more, it is highly likely interest rates will soon begin to move up. Waiting for a better price may effectively result in a worse deal! Plus, the home the buyer wants will likely be gone if they wait for the bottom, wherever that might be. All in all, the prudent buyer will take the steps necessary to secure the home of their choice today, while the selection and the interest rates are to their advantage.