Headline inflation, which measures the increase in the prices of goods and services in an economy, has been on a downward trend for the past six to seven months. This trend is mirrored in the core inflation rate, which excludes the prices of food and energy, and has been down for the past four months. The main driver of this trend has been the decrease in prices of goods and services, which has been good news for consumers. However, one area that has been slow to decrease in price is housing.

Housing is an important component of the economy and takes longer to adjust to changes in interest rates and other economic factors. This means that even as inflation rates decline, housing prices may remain high for some time. In response to this trend, the Federal Reserve is expected to keep increasing the funds rate, albeit at a minimum, to keep inflation in check. This means that interest rates will continue to stay up and may even continue to increase.

As a home buyer, there are ways to take advantage of this situation. One way is to buy homes at a discount. Working closely with your realtor can help you identify properties that are selling below market value. You can also negotiate with the seller to obtain concessions that can help cover some of the costs of purchasing the home. In many cases, sellers are willing to pay anywhere from $8,000 to $10,000 in concessions, which can help you buy down your interest rate.

Another strategy is to focus on equity. By making offers that are well below the appraised value of the home, you can secure a cushion of equity that can help you ride out any potential drops in the housing market in the next year or two. Your realtor can help you run comparables to get an idea of what the home could appraise for, and you can base your offer in comparison to that value and the list price.

In conclusion, the downward trend in inflation rates and the slow decline in housing prices offer an opportunity for homebuyers to take advantage of a market that is favorable to them. By working closely with your realtor and using strategies to obtain concessions and build equity, you can purchase a home at a discount and ride it back up when rates drop in the next year or two.