Today I want to discuss how to educate buyers, especially first-time homebuyers. Many people we speak to say they just want to wait until the market settles down because they’re concerned about overpaying for a home. This is a completely appropriate reason for waiting. However, the truth for the vast majority of cases is that it will cost them more to wait.
If your client is ready to buy or sell, they should not try to time the market. If a client says they want to wait and save more for a down payment, I would ask what kind of down payment they’re saving toward. This will unearth further information. Sometimes people think they need 20% down, which we all know is not true. Inform them about all of the different down payment programs.
If they’re waiting until the market settles down, I don’t know that the market will ever completely settle. I believe we are going to have a recession, probably in 2020, and it’s okay to tell people that. However, mention that it won’t be nearly as dire as what happened in 2008. In fact, it doesn’t necessarily mean we’ll have any kind of housing crisis; home values may not fall, but there may be more inventory for buyers to choose between.
Explain it to clients this way: If you wait, each year houses in our area are appreciating about 6%, so you’re missing out on an opportunity to build 6% of wealth into their new home. This also means that house prices will be around 6% higher a year from now. Another reason it isn’t wise to wait is that our interest rates are currently uncommonly low. No one can say how long that will continue. Eventually, they will rise. Interest rates are still hovering around 4% and lower. So, the affordability right now is exceptionally in a buyer’s favor.
If you explain these things to potential homeowners, it will truly help them understand. So, if their reasons are affordability and a market cool down, we can help explain that waiting isn’t in their best interest.
If you have any questions about conversations to have with different clients, reach out to me by phone or email. I would be glad to help.