7.50% Mortgage Rates Didn’t Kill the Housing Market…But the Wrong Conversation Might

Buyers Are Sitting on the Sidelines. Maybe It’s Time We Changed the Conversation.

This week, 30-year mortgage rates crossed the 7.50% threshold, grabbing headlines across the country and once again dominating the housing conversation…and unfortunately, something very predictable happened…Buyers hit the brakes…Some paused their home searches. Others decided they would simply “wait until rates come back down.” and many who were already sitting on the sidelines found another reason to stay there…I understand it…But, what bothers me, however, is that many buyers are making that decision because they don’t know what we know.

They see 7.50% and assume the conversation is over…I think that’s exactly where the conversation should begin…Stop Selling the Rate…Start Solving the Payment…

For decades, real estate has revolved around one primary question:  “What’s the sales price?”

Maybe we’re asking the wrong question…In this market, the better question may be:

“What monthly payment gets this buyer comfortable enough to buy the homes”. Because once we start there, the entire negotiation can change.

Consider a seller whose home has been sitting for 60 or 90 days. They’re considering a $10,000, $15,000 or even $20,000 price reduction because that’s what sellers have traditionally done when a house doesn’t sell…Cut the price…But does a $15,000 price reduction really change the buyer’s monthly payment enough to get them off the sidelines??? Maybe… but probably not…What if some of those same dollars were instead strategically used toward a temporary interest-rate buydown, closing costs or another financing structure designed to attack the buyer’s real problem:

The monthly payment…Suddenly, we’re no longer just negotiating a sales price.

We’re engineering affordability…This Is Where TEAM Matters.  Higher rates don’t have to be just a buyer problem. When buyers stop buying, they quickly become a seller problem, too

and that’s exactly why today’s market requires the listing agent, buyer’s agent and mortgage professional to work together…The seller wants to sell…The buyer wants to buy…Our job is to figure out how to bridge the gap between the two. Waiting for mortgage rates to magically return to 5% isn’t a strategy.  Creating a payment that works today is.

There are still buyers who need homes. There are still sellers who need to sell. And there are still plenty of transactions waiting to happen…We just have to put the pieces together differently. Because a 7.50% mortgage rate doesn’t necessarily mean “No.”  Sometimes it simply means:  “Let’s find a better way to get to Yes.”