Watching mortgage rates? Here's a reality check on the real estate market

SALT LAKE CITY — If you've been watching mortgage rates and telling yourself you'll buy when they come down, you might want to think again.

Jennifer Yeo is with Presidio Real Estate and knows the market inside and out. She shared a reality check on the real estate market.

Rate reality check

We've gotten used to incredibly low mortgage rates over the past few years.

"We don't wanna soon forget the historical lows of twos and threes," Yeo said. "If you look back over the last 50 years, our average interest rate was about 8%."

Those unusually low rates changed our expectations. Compared to recent history, today's rates feel expensive. Compared to more long-term history, they're actually much closer to normal. Yeo said we shouldn't make decisions based solely on the hope that rates will fall.

"I don't see it changing anytime soon," she said. "There are a lot of other things you could do to be in this market."

Yeo said many buyers spend so much time watching rates that they overlook factors they can actually control.

"People focus on the interest rate so much, but that's just one factor of having buying power," she explained.

She suggested talking with a lender to figure out what payment fits comfortably into your budget.

"Find out what your mortgage payment looks like and what's comfortable for you," Yeo said.

Before you buy

We can't control national interest rates, but Yeo said we can influence other parts of the lending equation.

"The things we can control are your credit, your debt to income, things like that," she said.

Those factors play an important role in determining borrowing power and financing options. She also pointed out that you have more options available than you might realize.

"Builders are buying rates down, sellers are buying some rates down for people," Yeo explained. "There's a couple things you can do when it comes to the interest rate."

While rates matter, they're not the only tool available.

Utah home values

A big advantage of the current market is minimal competition. Yeo mentioned the frenzy of 2020 and 2021 when historically low rates led to bidding wars.

"We had multiple offers and paying over appraised value and things like that," she said. "Right now there's a lot of opportunity in this market. There's way less competition."

Entering the market now could give you stronger negotiating power and better terms.

Rate buydowns

One strategy Yeo said to explore is a rate buydown.

"It's a great opportunity right now," she said. "The sellers are doing it. A lot of builders are doing it."

A rate buydown allows money from a seller or builder incentive to be applied toward lowering the buyer's mortgage rate.

"Basically take it off the price of the home and put it towards it, so they buy down your rate," Yeo explained. "You can get them down to, like, a 4% right now."

She recommended asking questions and investigating all your available options before ruling yourself out of the market.

Sellers Need to Adjust

Buyers aren't the only ones navigating a changing market. With more inventory and more choices available, sellers may need to offer incentives to stand out.

"If you're a seller in this market, get motivated," Yeo said. "You might have to share some of your equity with the buyers in this market, because there's so many options out there."

The environment has become more balanced, which means both sides need realistic expectations.

Will Buyers Regret Waiting?

Yeo emphasized that markets don't look obvious until they're in the past.

"I am a betting woman, and I bet there's going to be millions of people that wish they would've bought in this market," she said. "Historically ... our values have increased nonstop for the last 50 years."

Yeo said to get informed about the current market.

"Talk to an educated realtor, talk to an educated lender," she said. "Find out what opportunities are out there for you."

Find more information at presidioteam.com.

This story originally aired on KSL TV and has been reformatted for a digital audience using artificial intelligence.