The Federal Reserve is poised to lower interest rates any moment.
Right now, everyone looking to buy or sell real estate has one question on their mind: “Will interest rates fall by the end of the year?” The short answer is almost definitely yes. In fact, rates may have even dropped by the time you read this. While the Federal Reserve has been very adamant about keeping rates high to combat inflation, recent job reports were not as good as many people expected. As a result, the Fed might finally be forced to lower rates to boost the economy. So what does this mean for you? Lower rates will completely change our market if you want to buy or sell a home. Here are three things you can expect if and when rates finally fall:
1. Demand will increase as homes become more affordable. The truth is that most people need mortgages to afford a purchase as expensive as a home. This means that housing affordability is directly tied to mortgage interest rates, which tend to follow the Fed rate. Tons of buyers right now would love to purchase a house but have been priced out of the market due to higher rates. As soon as rates fall, these buyers will reenter the market, drive up demand, and cause home prices to increase.
2. Homes will sell faster in this new market. Right now, the market is relatively balanced in most areas of the U.S., with neither side having a significant leg up at negotiations. This will completely change once rates fall. More buyers entering the market will lead to more competition, more bidding wars, and a faster pace. Sellers will be able to make more demands, and buyers will be ready and willing to meet them since they have cash freed up from the lower rates. All the pent-up demand being unleashed means that our market will likely look more similar to the market we saw a few years ago when homes were flying off the market in days. You need to be prepared for this new environment, which brings me to my last point…
3. If you want to buy, get pre-approved ASAP. Rates could fall very soon; in fact, the first drop may have already happened by the time you see this. You need to get pre-approved before you hit the market so you can be ready for a quick close. Getting pre-approved will also give you an advantage over other buyers who are only pre-qualified.
If you are interested in buying a home in the near future, please call or email me. We can get you pre-approved and ready to compete. Plus, look out for more updates and information on future rate drops. I look forward to hearing from you!
