The U.S. real estate market has been thriving over the past several years. Even with increased borrowing rates, the lack of U.S. property inventory has kept property prices stable and, in many markets, expected to appreciate beyond market expectations.
Now, picture this: What if you purchased today at higher interest rates where owner-occupied buyers are sitting on the sidelines? Sure, your cost of borrowing would be higher; however, the likelihood of buying a property for more favorable terms and price is certainly higher. Now imagine what will happen to that property if interest rates were to drop to 4% next year.
Let the frenzy begin (again)!
Sophisticated real estate investors and funds jump at the opportunity to buy when others are not. This is when great deals are available, and competition for these properties is low. Sophisticated investors avoid getting caught in the FOMO frenzy when rates are low, and everyone is buying. They buy now and then simply wait to refinance to a lower rate when it makes sense. Marry the property. Date the rate.
Here’s the thrilling part for foreign national and U.S. expat investors who are contemplating a purchase in 2023. America Mortgages has loan programs such as 40-year fixed terms or 10-year fixed interest-only programs, which offset the current higher rates, making payments more affordable.
Shifts in Property Prices
If interest rates were to fall to 4%, one immediate consequence would likely be an upswing in property prices. Lower interest rates make borrowing more affordable, creating a larger pool of potential homebuyers including those looking to buy a home to live in (owner-occupied) and real estate investors. This heightened demand typically drives home prices up. However, the extent of this price increase would still depend on factors like the overall health of the economy and the housing supply.
Homeownership Trends and Refinancing
Indeed, things are changing in how people see owning a home. James Healy, a real estate expert, says Millennials are playing a big role in this shift. He explains, “The American dream of owning a home is still there, but now millennials are the ones taking the lead. They see real estate as an investment, even if they live there, and they might not feel as emotionally attached as in the past.”
Furthermore, homeowners are now embracing the concept of shorter-term investments, with an increasing number contemplating stays of just 2 to 3 years in their properties. This shift in mindset opens opportunities for refinancing. In situations like this, refinancing within a year to get interest rates under 4% starts to look really appealing, making it easier to achieve the dream of owning a home.
2024 Mortgage Rate Forecast
As per MBA’s projections, the average interest rate for a 30-year fixed mortgage is estimated to drop significantly by late 2024. If you are looking to buy a home now, it’s just a matter of waiting for interest rates to become more favorable. If rates go in the opposite direction, you have the comfort of knowing you’re in a long-term fixed-term loan regardless of the age of the borrower, Something very unique to global real estate investors.
Why Act Now?
- Long-Term Appreciation: Property values are projected to continue appreciating over time. Although they might not grow in price as quickly, a recovering economy, low unemployment rates, and limited housing supply collectively support the enduring appreciation of property values.
- Resourceful Lenders: At America Mortgages, we specialize in helping foreign national and U.S. expat investors navigate the U.S. property market. We offer a range of customized programs designed to simplify the loan qualification process.
In conclusion, while lower interest rates might seem important for the U.S. real estate market, there’s more to think about. Investors should consider how sophisticated real estate investors and funds look at property investing in a “down” market. They look at how property values could grow over time and creative financing options that can maximize yield. They also focus on the “now” while strategically planning for “tomorrow.”
Whether you’re a foreign national, a U.S. expat, or a seasoned investor, America Mortgages’ specialized lending programs are designed to make your homeownership dreams a reality. With our expertise and dedication to your success, we ensure that you not only secure favorable terms but also embark on a journey of financial growth and prosperity. Trust America Mortgages to be your partner in achieving your real estate goals. Your future in U.S. real estate begins with us. [email protected]