Why the 2024 Election and Federal Reserve Meeting Could Mean It’s Smart to Buy a Home Now
The 2024 election and the Federal Reserve’s upcoming policy decisions have big implications for mortgage rates and the housing market. With Donald Trump back in office and the Fed expected to lower interest rates this week, it might seem wise to wait for rates to fall further. But with buyer competition already heating up, waiting could mean facing higher prices, fewer concessions, and more competing offers. Here’s why buying now and refinancing later could be your best move.
The Market Response to Trump’s Re-Election and Expected Policies
Trump’s re-election has brought renewed energy to the financial markets, with major indexes like the Dow and S&P 500 reaching record highs. According to Reuters, this optimism stems from anticipated pro-business policies, such as tax cuts and deregulation, that could boost the economy. Investors are betting on a strong economy under Trump, which could drive up demand for homes as consumer confidence grows (Reuters).
Trump’s Housing Plans and What They Mean for Buyers and Sellers
The Trump administration is likely to push policies that increase housing supply, such as reducing regulations on homebuilders. TheStreet notes that loosening construction restrictions could bring more homes to the market, helping to ease the current inventory shortage. However, demand may still outpace supply, especially if mortgage rates fall further and bring more buyers into the market (TheStreet).
High demand coupled with limited inventory is likely to drive prices higher. This means that while more homes might be built, the competition for these properties could make the market more challenging for buyers. Sellers might also become less willing to offer concessions or price reductions as demand grows.
Fed’s Expected Rate Cuts: Lower Rates, but a Competitive Market
The Federal Reserve is expected to announce another rate cut this week, its second in recent months. By reducing the federal funds rate, the Fed makes borrowing cheaper, which can translate to lower mortgage rates. However, mortgage rates have been volatile, and while they’re expected to trend down, the path may be gradual. CNET highlights that while the average 30-year fixed mortgage rate is currently around 6.90%, the Fed’s cuts should help rates decrease over time, potentially bringing them closer to 6% by the end of next year (CNET).
The Cost of Waiting: Higher Prices, Fewer Concessions, and More Bidding Wars
With mortgage rates likely to continue declining next year, it may seem tempting to wait. However, delaying could mean facing significantly more competition, higher home prices, and reduced negotiating power. Here’s why:
- Rising Prices: As more buyers jump in to take advantage of lower rates, demand will likely push home prices higher. Buying now could mean locking in today’s prices before demand drives them up.
- Less Seller Flexibility: Right now, sellers may be more willing to offer concessions, such as help with closing costs or minor repairs. But with more buyers in the market next year, sellers may not need to offer such incentives.
- Competing Offers: Increased buyer activity often leads to bidding wars, which can result in paying above the listing price to secure a home. Acting now allows you to avoid the rush and get a better deal without the stress of intense competition.
Why Buying Now and Refinancing Later Could Be the Smart Move
The current market environment offers a unique opportunity for buyers. While mortgage rates are likely to drop over the next year, waiting could lead to higher home prices and fewer incentives from sellers. By buying now, you can lock in today’s home prices, avoid heavy competition, and take advantage of any seller concessions. If mortgage rates do fall as expected, you can always refinance later to benefit from the lower rates.
Key Takeaways
- Buy Now, Refinance Later: Lock in a home at today’s price, and if rates fall, refinance to a lower mortgage rate in the future.
- Get Ahead of Competition: With buyer activity expected to surge as rates drop, purchasing now allows you to avoid competing offers and potentially higher prices.
- Secure Seller Concessions: Buyers may find more flexibility with sellers in today’s market. Next year, with more competition, concessions could be much harder to come by.
Conclusion
The combination of Trump’s pro-growth policies and the Fed’s anticipated rate cuts creates an environment where buying a home now, rather than waiting, may offer the best advantage. This strategy allows you to secure a home at today’s price and take advantage of any current seller concessions while giving you the option to refinance as rates drop. Acting now can help you avoid the challenges of increased competition, higher prices, and reduced negotiating power as the housing market heats up.
Sources:
- Reuters: “Wall Street hits record high as Trump returns as US president”
- TheStreet: “2024 Election Will Have Surprising Effects on the Housing Market”
- CNET: “Mortgage Rates Surge After the Election, Before Fed Rate Cut”
LiveMint: “US Fed Meeting | Jerome Powell-led FOMC to meet today”
George Scott, Realtor ®️
Your Local Clarksville Real Estate Agent
(931) 385-5195
Keller Williams Realty
2279-D Wilma Rudolph Blvd.
Clarksville, TN, 37040
(931) 648-8500