This blog will primarily do a deep dive into the current state of the real estate market exploring what we call “split personality” or a doom loop. We're going to be offering insights on how to navigate these turbulent waters.
The real estate market, especially here in Charlotte, has been nothing short of a roller coaster ride lately. On one hand we're seeing neighborhoods like Madison Park, Beverly Woods Montibello, North Myers Park and a few others experience unprecedented price growth. These areas are red hot with homes selling fast at a premium and getting lots of showings especially if they've been renovated.
On the other hand we have other neighborhoods that are struggling to attract buyers and those that are in need of updates or located in less desirable areas. What we are witnessing is a real estate “Doom Loop” with certain areas soaring to new heights, while others are left behind. One of the primary drivers behind the split market is affordability.
With home prices continuing to rise, buyers are feeling the squeeze right now when it comes to their monthly payments. That's why it's crucial for buyers to explore all their options and to work with professionals who can help them navigate this challenging landscape.
Strategies for Buyers in the Real Estate Doom Loop
Buydowns
One strategy that buyers can leverage to lower their monthly payments is a buydown on their interest rate. This can be done by working with a real estate advisor alongside a trusted mortgage banker. We can explore these options and make homeowners have more attainable options.
Let me share an in depth example of the family that we worked with. This family closed on a house at the end of 2023 and their interest rate was above 7%. We were able to work out at 2-1 buydown which is a year one, year two buydown that works its way back up to the interest rate of today. We (the agent) negotiated with the seller who provided a credit towards the buydown to make this happen. Which in turn lowers the monthly payments. (See example below)
For example you have a 2-1 buydown you locked in today that means you'd have a 5% interest rate for year one and for year 2 you'd have a 6% interest rate. Once you hit year 3, it would jump back up to the market rate (which today is 7%). Doing this is a good way of buying you time and lowering your monthly payments. The main point of utilizing a buydown is knowing that the rate is going to go back down at the end of two years which is when you'd likely refinance.
Refinancing
In a way you're betting on what we're reading consistently in the media. Media that's portraying correct information is that we're going to have a number of changes downward to the federal funds rate which is going to lower interest rates. The idea is that in 2026/27, you'll be able to get a lower rate than you can today. If rates go down a lot even one year into your buy down, you can refinance at any point in time. It made all the difference for our clients to be able to afford their dream home. It's stories like these that highlight the importance of having a knowledgeable team on your side when navigating what is a very complex and bifurcated market.
What about for Sellers?
Sellers can also benefit from working with experts in the market. Sellers in highly desirable neighborhoods are seeing their property sell quickly and often above the asking price. However sellers in other areas may be facing challenges and attracting buyers. That's where our role as real estate professionals comes in. By providing expert guidance and support, we can help our clients achieve their real estate goals. While the market is constantly changing for buyers and sellers, it's crucial for us to stay informed and to adapt to changing trends to best serve our clients. Our clients rely on us to be their trusted advisors and it's our responsibility to deliver the highest level of service and expertise in any circumstance.
Fagan Realty is Here to Help
The market can feel like a Doom Loop: you're one way or the other. You're the one in a great neighborhood or in a renovated house that sells quickly which makes your experience highly positive. Maybe your selling experience was less than positive because you feel like your home is not in a “desirable” location. OR you’re on the buying side talking about buy downs or buying the home that needs a lot of work. Do not panic! This is where we come in.
Our team is ready to help you navigate either side of the market: buying or selling.
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