Mortgage Rates Plummet! Expert Insights from Armond Ohan

What impact do you foresee the recent interest rate drops having on the real estate market?

A.O. Absolutely. First, let's talk about buyers. With lower rates, more competition will enter the market, which is going to drive prices higher. But at the same time, sellers will have an opportunity to find their next property. Previously, they were hesitant to sell because the next property was too expensive. So, I think this will add more activity to the market. It's going to be very hyper-local in terms of how it impacts sales prices, but generally speaking, more buyers will drive prices up.

For those looking to buy, is it better to lock in a rate now or wait for further decreases?

A.O. In LA, we’re seeing about 9% appreciation. Let's say you have a home worth $1,000,000 today—next year, that same home will be worth close to $1.1 million. So, if you wait 12 months, you’re essentially losing $100,000. Why not buy now if you’re comfortable with the payments? You can always refinance later. A typical refinance only costs about $5,000, so think of it like an insurance policy—buy now, enjoy the home, and take advantage of tax benefits. Later, when you find a better rate, refinance. As long as you're comfortable with the payments, you'll gain equity as the home value appreciates.

What advice would you give to first-time buyers looking to take advantage of lower rates?

A.O. The key is to open up more properties to the market. Buyers will see higher prices as competition increases with lower rates. In LA, home prices are already above the national average, so the first home you buy likely won’t be your dream home. It’s more of a stepping stone. Find a home in the right location that meets your needs and lock it in. In a few years, you can sell it, take the equity, and buy your dream home. For first-time buyers in LA, it's hard to find your dream home immediately, so focus on the long-term strategy.

How can buyers best prepare to compete as demand increases due to lower rates?

A.O. To stand out in a competitive market, preparation is key. With rates dropping, homes will get 20 to 30 offers. How do you make yours stand out? First, get your financials in order. Work with a loan officer who can help get your offer accepted. When I work with clients, I reach out to the listing agent and tell them that I can close the transaction in 14 days because the buyer has already been pre-approved. We’ve already gone through all the necessary steps, so it’s not just an offer—we're ready to close. Get your credit in line, submit all your financials, and be ready to move quickly.

How will lower interest rates affect homeowners considering refinancing?

A.O. The key term I use is the "break-even point." Let’s say refinancing costs around $4,000 to $5,000. Some companies may say there's no out-of-pocket expense, but there's no such thing as a free refinance—those costs are factored in somehow, either through the rate or added to the loan. We look at your savings. For example, if you’re at 7% and the market rate is 5-6%, we calculate your monthly savings and divide it by the cost of the refinance. If there’s a break-even point of two years, it makes sense to refinance. After 24 payments, you start saving, and if you're not planning to sell the home soon, it becomes a financially sound decision.