5 Reasons To Buy When Rates Are High

Over the last year, interest rates have continued to climb, but Northwest Indiana’s home values continue to remain consistent. Do higher interest rates mean buyers should sit back and wait for the rates to drop? In my opinion, the answer is no. There are many housing market benefits for buyers when rates increase, and in certain scenarios, waiting can actually make a buyer pay more in the long run!

1. Less Demand

High-interest rates can work to a buyer's advantage. When interest rates are elevated, the demand for real estate tends to decrease, which can lead to more favorable deals for active home buyers. Sellers may be more inclined to negotiate on price or other terms, and buyers could find themselves in a better position to secure their dream home at a more affordable cost.

2. Less Competition

Not too long ago, buyers in Northwest Indiana were experiencing a highly competitive market, with buyers having to pay well over the asking price in order to compete. This led to massive price increases and frustrations with continuous rejected offers. With increasing rates, some buyers become priced out of the market forcing them to push pause on their new home search. Others may choose to wait; hoping for lower rates to return. These two scenarios create opportunities for other buyers who choose to continue with purchasing.

3. Negotiation Advantage

Higher rates result in less competition, resulting in more room for negotiation. With fewer buyers in the market place, sellers may be more willing to negotiate on price or terms for a more favorable agreement towards the buyer. Whether a seller offers closing cost concessions, agrees to pay for repairs, or more favorable possession terms, buyers can benefit in this market by having a more appealing outcome or receiving a less costly real estate transaction.

4. Less Risk for Buyers

Over the last few years, the high level of competition caused a lot of buyers to waive contingencies like inspections or appraisals that, otherwise, in a normal market, would have been implemented as a safety net. Waiving these contingencies provided beneficial conditions for sellers. And, buyer's knew they needed to be flexible in order to secure a home! As the market shifts, buyers benefit by decreasing their risk and regaining the ability to conduct the appropriate inspections, appraisals, or other necessary contingencies offering peace of mind in their purchase.

5. Market Cycles

Educated investors and buyers look to the future and know the real estate market goes through market cycles. Buying now when interest rates are higher and potentially lower home prices will better position them for higher returns when the market switches and housing prices increase. Additionally, homeowners know their high rate is only temporary with changing market cycles, and they can refinance when rates are lower if the opportunity presents itself.

We advise our clients to take action now! Waiting only makes you pay more and decreases your buying power. Now is your opportunity to take advantage of less competition and gain a favorable deal for your next real estate purchase. Ready to secure your next real estate purchase? We are here to guide you!