You’ve all likely heard about The Fed lowering the funds rate last week so I won’t repeat any of that. And though the funds rate is not directly tied to mortgage interest rates, at the very least, The Fed’s action has restored some Buyer confidence back into the market. 

 

If there’s anything I’ve learned in these past 4 years of Real Estate roller-coasting, it’s that Buyer confidence pretty much drives everything — regardless of any facts present. And while we have seen a steady decline in mortgage interest rates over the past 5 months (the lowest they’ve been in nearly 2 years), Buyers are just now re-entering the market in September. 

 

According to Mortgage Bankers Association, the number of people applying for mortgages in the US continues to increase week-by-week. Mortgage applications increased 1.4% as of September 6th. This was after already increasing by 1.6% in the previous period — the majority of these applications are home Buyers, not refinances. This is a clear indicator that more Buyers will be active in the market in the coming weeks.

Here in Greater Nashville, we are already seeing the increase in competition among Buyers. It’s not too crazy yet, but this weekend was the first weekend in years where I’ve heard of several Real Estate colleagues grumbling about losing a home to multiple offers — Many of these are homes that have been sitting on the market for 90+ days, suddenly getting traction.

 

If you’ve been following the market, and the information I’ve been providing, this comes as no surprise. But oftentimes, Buyers are crippled by herd mentality.

 

Let’s talk about this for a minute – because it’s real and I’ve witnessed too many people follow the crowd in Real Estate only to be unhappy with where they are now. They’ve come to me for help getting in a better place — and I’m happy to help — but I also want to help *you* avoid being in that position altogether.

 

A large majority of my personal business this year is helping clients who have made poor Real Estate decisions in the past 3 years. You may have noticed too — homes that were sold in 2020 through 2022 are now up For Sale again! It’s no coincidence.

 

Obviously, there are the life circumstances no one can avoid — like job relocations or layoffs, divorce, death — and these things can sneak up on you and happen pretty quickly. There are quite a few people who fall into this category and find themselves quickly re-selling. But the others… They’re just not happy with the home they chose when the market moved so much faster during and directly after the pandemic.

 

I said excessively during the Covid Stay-Home orders that it was the perfect time to pounce — when no one else was. I urged Buyers. I even went so far as to predict that it’s the only other moment in our lifetime, beside the Great Recession, where we’d have so much opportunity in Real Estate because the market would go nuts when everything opened back up again. Sure, the opportunity looked different than the Great Recession-style plummet in home prices, but Covid Stay Home orders presented opportunity nonetheless. No one else was out, everyone was afraid, and the clients of mine who followed my advice back then won BIG. (Disclaimer: I had no idea we would earn so much equity in such a short amount of time — no one could have predicted how crazy the market was about to get. But even my basic expectations would have set up my clients in a sweet position.)

 

Those who didn’t listen weren’t comfortable jumping off the sidelines until everyone else did, triggered by a drop in mortgage interest rates, and they ended up paying hundreds of thousands more in home purchase price — the one number you can’t change in Real Estate. They waited to act when everyone else did, paid a lot of money, and made frenzied decisions that they otherwise would not have. Now they want to move.

 

Locally, our market is a lot more insulated from economic downturns. Greater Nashville is also much more diverse than a lot of other cities as far as the industries that feed us, which is why we’re relatively insulated and cannot thoroughly lean on national news headlines to guide us. I’ve used the example of Florida in the past and the dramatic flood of homes they’re seeing on the market due to their various economic issues. That’s not happening here.

 

Zooming in on Williamson County, we do have more homes on the market right now than we did this time last year, but hardly.

This graph shows 2024 so far, represented by the green dot. We really haven’t grown much inventory at all since May, and June/July are the months we usually have the highest inventory.

 

And comparing year-to-year… we are rivaling THE LOWEST inventory we’ve had in most recent Augusts. Considerably below where we were in 2022 — and almost half the amount of inventory we had in 2019, our last “normal” year.

 

So we are in no inventory crisis right now and there are almost zero indicators pointing to that happening.

 

As a result, our prices have held steady with August prices right smack dab in the middle of 2024’s prices so far, and above any of the prices we’ve seen in all the past years. So year-to-year, we’ve got price growth. The biggest change we’re expecting to see is a continuation of mortgage interest rates in decline — though nothing like what happened 3 years ago! Do not expect to see 2% or 3% rates again. And likely not 4% for a reeeeeeallly long time.

These numbers have been all the chatter lately, and this chart by Mortgage News Daily shows why. You can see a pretty consistent fall in rates to the lowest on record for 2024. As we inch down closer to the 5% bracket with a couple of products already dipping into it, affordability is becoming more in reach for a wider group of home Buyers.

 

Realtor.com just published an article showing what this difference in affordability is looking like in monthly mortgage payments when you compare the change in mortgage rates and the increase in national home sale prices.

 

For example: The mortgage on a $425,000 home in October 2023 was $2,445/mo. As of September 2024, the mortgage on the same home valued at $429,990 is $2,082/mo. due to the current drop in interest rates. This is a savings of almost $400/mo. since mortgage interest rates peaked in October 2023.

 

Be careful what you read and believe about where mortgage interest rates are headed, though. I personally do not believe they’ll dip a whole lot lower than where they are now, even into 2025. Though I do expected home prices to continue to increase. The Fed funds rate will likely continue to be dropped, but remember, that’s not the same as mortgage rates. And thankfully so — because our economy cannot handle another strain on supply and resources like what we saw when rates were so low last time. If mortgage rates drop too much lower into the 5% range, we will notice an incredible loosening in our market. In Williamson County, our average sales price is already the highest of any other August on record, at about $1,186,000.

This Fall will be an ideal time to get out there into the market — and usually is — because you should always buy when no one else is. And for Sellers– the more Sellers who list, the more Buyers will be enticed to buy. 

 

Put your blinders on to what everyone else is doing and do what works for you. Incomes across the US continue to increase and ICE Mortgage estimates that payment-to-income ratios are within 5% of historical averages in almost half of the US markets, including in Tennessee. Affordability is well on its way to returning.

 

So if the numbers work for you, don’t let what everyone else is doing slow you down. Go your own way, travel your own road. Let me know if you need help getting there. I have plenty of resources and advisors who can help you crunch these ever-changing numbers.

 

Thinking of moving? Need a plan tailored to your needs? I’d love to help you. I’m a Franklin resident and a Multi-Platinum Award-Winning Williamson County REALTOR ranking in the top 1.5% of agents locally. I am a top producer within Benchmark Realty, the largest brokerage in Tennessee and among the largest in the country. My continuing education includes several designations and my experience keeps me up-to-date with fast-changing market trends. I am a Million-Dollar GUILD Member of the Luxury Home Marketing Institute, my market insights are regularly featured in broadcast media, and my success planted me on the front page of a December 2021 Nashville-area Magazine. But most importantly, I specialize in helping my friends and neighbors buy and sell homes. Why look further when you’ve got a friend and neighbor who is among the best in the business!