Despite the current historic heat wave, the real estate engine keeps humming. This weekend I put my new listing at 708 Lamont Ave in Novato into escrow. The buyer’s pre-approval letter had one of the lower mortgage interest rate number I’ve seen in a while, in the high 6’s. While rates ticked up slightly in early July, in June they dropped for four weeks in a row, which added fuel to the housing market fire.
I am reminded of selling homes in the fall of 2020, when the shroud of Covid covered our society and fires raged across Northern California. The skies were literally orange during a broker’s open I held on Montecillo Rd in Terra Linda. I ended up selling that house with multiple offers over the asking price. Mortgage interest rates were under 3%. The lesson, housing demand is not so much driven by what’s happening in our physical environment as it is what’s happening in our economic environment. Specifically, mortgage interest rates drive the market demand.
A few weeks ago, I had a discussion with some buyers about one of my listings. The wife was getting sick of looking at houses and was ready to make an offer because she liked the house. The husband wasn’t sold on the house and wanted to wait for interest rates to come down. The problem with that approach is that as rates decline, we are likely to see more buyers in the market, and no corresponding inventory increase. As difficult as it is the find the right house and get an offer accepted in today’s market, it’s going to be a lot more challenging when more interest rate motivated buyers are added into the mix.
I know it’s not the most enjoyable thing to go house hunting in the heat of the summer. My advice to buyers is keep going to open houses. Don’t stop looking at the new listings online. If you find the right house you can afford, then buy it. Don’t wait for interest rates to come down, because you can always refinance later when/if they do. ‘Good things come to those who wait?’ Maybe in other aspects of life, but in real estate, ‘he who hesitates is lost’, and priced out of the Marin market.