Savvy Buyers are Scooping Up Farmington Real Estate
For two years, I kept hearing, "You know, Bryan, I would sell my house in a heartbeat. If you could find me another house, if you could find me that next-level house, I would sell this house," We had an extensive inventory issue and not many houses for sale in Farmington New Mexico. Three months ago, the Federal Reserve sent shockwaves through the real estate world when it raised interest rates by a half-point for the first time in 22 years. Many buyers sat down and said, "You know what, I'm going to wait until interest rates settle" or "I am going to wait for Farmington Real Estate to calm down. Savvy buyers got precisely what they wanted!
Looking at historical rates, it's unlikely we'll ever see interest rates in the twos and threes again, so the buyers that stayed in the market had a significant advantage. Savvy buyers who entered the market were dealing with fewer multiple offers and were likelier to attain the house they wanted. They were competing with fewer people; they're more likely to pay at the list price, or maybe even a little bit lower than the list price. Suddenly, the stats in our MLS went from selling it at almost 100% of the original list price to 97% of the original list price.
There are a couple of ways that you can avoid the consequences of a large interest rate. One of those is by making bi-monthly payments. A payment of $3,000 per month in two increments of $1,500 could reduce a 30-year mortgage to 23 years because of how interest accrues. Paying one extra payment annually will also reduce your interest burden significantly. Even at five and a half percent, you'll pay less over the life of the loan and interest than you would have if you had a 3% interest rate. Now perhaps you want to buy one of those high-end houses; maybe you're jumping from a $400,000 house to an $800,000 one. Here's the beauty is that over the last two years, if you haven't cashed out the equity in your home, you will likely have 25% more equity than you didn't have before. You can take that cash, roll it into the next house, and start making bi-monthly payments and you won't suffer the full consequences of higher interest rates. You'll be able to take advantage of that higher-end market that stopped moving as fast as it was and get more bang for your buck.
If you've got a 5000-square-foot house and you're planning on downsizing, right now is a great time to do it because there are still buyers in that price range. Because of inventory in that range, you might take a little bit less money for your house than you would have six months ago, but interest rates don't affect you. If you're in an $800,000 home, perhaps you can take the equity from that house and pay cash for a lesser place as you're downsizing.
Savvy buyers are taking advantage of this market in a couple of ways monthly payments, extra principal payments, or taking the cash out of the house and downsizing. So don't be left out on the field. Interest rates more than likely will not be coming down, and house prices. I don't have a crystal ball, but presumably, they will continue to climb. They've continued to rise for the last two months even though interest rates have gone up from 3.1% in January to about five and a half percent today when I checked. Savvy buyers are taking advantage of this market, and you should act too!