As 2024 comes into the fall months and approaches its last quarter, there is much anticipation for a rate drop by the federal reserve. This begs the question, should you sit on the sideline until this indeed happens? (and there is strong indication that it will). As a real estate agent, you might find my answer bias. However, as a real estate investor, I can tell you I am doing the exact opposite right now, here’s why.
We’ve all seen and heard the headlines about the housing crisis and a shortage of affordable housing. There’s no need to beat a dead horse, but let’s examine if this issue is or will be solved in the near future. As presidential elections loom closer, both candidates have expressed intention to solve the housing issue, but are taking very different approaches. This is an entirely separate conversation, but I will touch on it briefly. Regardless of who gets elected, 2 things are almost certain: 1. More homes need to be built, and 2. inflation will probably keep rising. Let’s focus on the first point, until more houses are built, the issue won’t be resolved.
For that reason, a rate drop will not result in more people buying homes, what it will likely result in is more saturation to an already extremely competitive market, this is especially true for the remainder of 2024. As for the new year and new promises from presidential candidates, if whoever gets elected does begin approving initiatives to build more homes, there will likely be a lag time between when this process begins and when new homes are actually available. During this time, rate drops, down payment assistance, and other programs will not necessarily be effective at enabling more people to buy homes, but once again, it will add more competition to scarce inventory.
As reports that the market is “softening” and homes are sitting on the market for slightly longer (In Eastern MA where I live) it is unclear if this is a direct result of buyers holding back in anticipation of a rate drop. What I can tell you is, we are buying. This is not blind faith or high stakes gambling, but rather tactical investing. You don’t have to be Warren Buffet to understand that when no one else is buying, it’s the time to buy. It’s the time when sellers are more likely to agree to lower offers, concessions, and other variable items for buyers.
Lastly, I will bring it back to my point about inflation. We’ve all heard the stories about grandma and grandpa buying their old bungalow for 50 cents and a couple shoe strings back in the day, and now it’s worth over a million dollars. This is not some voodoo magic that happens over night, it is largely a result of inflation that happens over many years. With inflation likely to stick around with us for the long haul, owning an asset that performs well during inflationary times creates a strong foundation for your financial future, whether you’re a real estate investor or a regular home owner.
With this, I implore you not to listen to all the negative talk about real estate, and not to wait until the next president solves your problems for you. It won’t happen. Take matters into your own hands and create the future you want for you and your family. Thanks for reading
*This is not investment, financial, or tax advice, this is for educational purposes only*