Recently, we’ve heard a lot about high interest rates making property ownership less affordable. On one hand, this is true but let’s take a deeper look at the effects of higher interest rates on the local real estate market first.
During the Pandemic, prices went to a record high in a short period of time. Now that the craze has subsided and interest rates are higher, properties in Utah are sitting on the market much longer without selling, some not receiving showings or offers. This is bringing prices down, as well as encouraging Sellers take a much harder look at offers that are below asking price. The higher interest rates have started to push home prices down, which can help offset the current interest rate.
With the tables starting to turn from a strong Seller’s market, we’ve been able to negotiate Seller paid concessions off the purchase price that Buyers have used to “buy down the interest rate”. In other words, the Seller pays you a credit that your lender can use to reduce your monthly payment for 2 or 3 years, or even permanently, depending on the loan program. This gives you 2-3 years to refinance the loan, and interest rates are likely to go down in future years.
Purchasing your home in Utah with less demand in the market will likely yield a lower purchase price. Ultimately this will make the property more affordable to you. If you wait for interest rates to decrease, it will likely result in a higher purchase price once inflation is considered, and the market recovers later this year or early next year.
If history tells us anything, waiting to buy property in Park City will end up costing you more. Please reach out and I can get you in touch with a local lender who can further explain the “Buydown Programs”.
Let’s connect on your real estate needs this year! Doug – 435-731-0170
Buydown: Definition, Types, Examples, and Pros & Cons (investopedia.com)
