DOYLESTOWN, Pa., Feb. 27, 2024 /PRNewswire/ -- As we enter 2024, clouds gather over the real estate market, fueling speculation of an impending crash. As interest rates soar to a 20-year high and inflation reaching a 40-year peak, buyers are taking on a cautious "wait and see" strategy. In a recent surge, interest rates have climbed to 7.25% for a 30-year fixed mortgage, a significant leap from the 3.15% seen in just 2021, according to data from Bank of America.
The Government's flip-flopping stance is leaving American's scratching their heads. Despite indications of three rate cuts in 2024, announced back in December 2023, they are yet to materialize. At the recent January 2024 meeting, the Federal Reserve opted to maintain interest rates at their sky-high levels, citing the necessity for sustained evidence of a stabilized inflation.
According to Fannie Mac's National Housing Survey, only 14% of Americans believe it's a good time to buy a home. Homeowners and real estate investors brace for a turbulent road ahead. Amidst whispers of a looming recession, experts weigh in on the potential repercussions.
In this stormy climate, what's the prudent course of action? Doylestown Real Estate Lawyer, Ron Isgate, Esq weighs in with valuable advice:
Hey Homeowners!
If you've found your dream digs or have a pressing need to relocate, don't hesitate- make the move. Your aim is to refinance when rates take a dip. But, if you're just window shopping for a change, it's' worth holding off for a bit to see how the market evolves in the coming months. Now, for sellers, if you're cruising with a sweet, low rate, you may want to hold off selling. But, if you have a higher rate in the 6-7% range, don't sweat it, make the move.
Thinking of Investing in Real Estate?
Get ready for a market shake-up! A staggering $1.5 trillion of commercial real estate debt will come due for repayment by the end of 2025, according to Bloomberg.com. Here's the kicker: many of these loans barely made the cut when rates were at the low to mid 3's. Now, they're looking at resetting or refinancing into programs with interest rates well into the 7% range. With banks tightening their belts and demanding higher DSCR ratios, it's a recipe for trouble. Property owners facing this dilemma have limited options: sell at a lower price, refinance with out-of-pocket funds, or face foreclosure. But for savvy investors, it's an opportunity to snag properties at discounted rates.
In closing, homeowners should carefully consider moving with an eye on refinancing opportunities. As for investors, let's stay put for the next 12 months and observe if the market floods with resetting commercial properties.
Ron Isgate, Esq Bio
Ron Isgate, Esq is a Doylestown Real Estate Attorney with Isgate Law, Associate Broker with eXp Commercial and hard money lender at Stone Commercial Capital. He offers a unique blend of expertise on the current landscape.
SOURCE Isgate Law
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