What’s good about interest rates? These 3 things.
If you’re a real estate professional or a buyer/seller, you know plenty of conversation has centered around interest rates, especially during the past year. There’s no way to sugarcoat it. But when the Federal Reserve chose not to raise its rate in June, it was good news all around.
While more hikes are likely on the horizon – this decision signified rates could finally be on the long-term downswing. Here’s why and how it could affect buyers, sellers, and real estate professionals going forward. While mortgage rates aren’t the same as the Federal Reserve interest rate, the two figures are always connected.
Good news for buyers
The decision to pause interest rate hikes is excellent news for home buyers for one main reason: mortgage rates are expected to decline after steadily increasing since officials started raising rates at the beginning of 2022. According to Realtor.com Chief Economist Danielle Hale, mortgage rates may have peaked, and rates could be back in the low 6 percent range by the end of 2023. That wouldn’t be as low as a couple of years ago, but it could be enticing enough for many buyers who have been waiting to jump back into the housing market after staying on the sidelines as interest rates steadily rose.
Good news for sellers
Lower mortgage rates enticing more buyers into the market also means more competition for each home and a better chance of selling at a great price. This is a welcome relief for sellers after rising interest rates caused home sales to fall by 23.2% nationwide and median home prices to fall by 1.7% over the last year. Plus, if inflation is ultimately slowed, sellers (all homeowners) could retain the big boost in equity they’ve enjoyed lately.
Good news for everyone
Overall, inflation is declining, national home prices have not plummeted as some had feared, and the job market remains strong. All of this could mean a soft landing to tame inflation without causing an overall economic recession in our future, which could mean a return to normality after years of extreme ups and downs for the housing market.
No matter what the future holds for interest rates and otherwise, our teams love helping you navigate the journey home. Thank you for trusting us with your residential and commercial transactions. We are always here for you!