Interest rates affect real estate. What affects interest rates?
By now, we may all have heard so much "rate hike" talk that we are numb to it. But for real estate, interest rates are one key indicator of whether we will find ourselves in a sellers’ market or a buyers’ market. This week and next are going to be big for the rates market and for the spring real estate market. Here's why!
1. Federal Reserve Meeting. The Feds will meet to talk about another rate hike shortly. Experts expect a 50-basis point hike, but the actual number will be shaped by these two other upcoming indicators.
2. February’s Unemployment Report. Friday, February unemployment rates will be released. Unfortunately, January 2023's Report was a blow to policy makers when it revealed unemployment was lower than hoped. In fact, unemployment was at the lowest level we've seen since May 1969 according to the US Bureau of Labor Statistics. If unemployment in February rebels against policy makers' wishes, expect to feel the rate squeeze. 3. Jerome Powell's Testimony. Federal Reserve Chair Jerome Powell has a busy week on Capital Hill. Economists and financial experts are watching closely - reading the tea leaves left behind. While we already know he has indicated interest rates are likely to head higher than previously expected, the question remains - how much higher? What's the impact to Real Estate? While mortgage interest rates are not directly linked to the federal funds rate (how much the government thinks banks should charge to lend money to each other), financial markets are intertwined. While the mortgage rates market felt a slight reprieve going into February when average rates hovered around 6%, the mirage faded. Rates shifted into high gear with a 7% average later in the month, and according to the Mortgage Bankers Association data, mortgage applications dropped 3 weeks in a row. Future rate jumps, coupled with the low inventory and the economic uncertainty game that's been played for over a year now, make for a potentially nuanced spring real estate market. Despite potential rate increases, historically low inventory may cause motivated buyers to battle to the death over the few good homes on the market - creating another sellers’ spring market. But if rates and economic outlooks shift dramatically, the reverse could happen with buyers in the driver’s seat. As we buckle up for the ride over the next two weeks…what’s your prediction?
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Authored by: Kat Medaries, REALTOR® MT Realty Advisors of Long & Foster Real Estate Village of Midlothian Sales, 1100 Jefferson Green Circle, Midlothian, VA 23113 Licensed to sell in the Commonwealth of VA | Equal Housing Opportunity For informational purposes only. Not intended as legal, financial or credit counseling advice. Seek the assistance of a professional.
3 Comments
7/5/2023 07:35:47 am
Thank you for this insightful blog post on real estate! As someone interested in the housing market, your article provided some valuable information and considerations.
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7/5/2023 07:37:07 am
I found your explanation of the current trends in the real estate market very interesting. Understanding factors such as supply and demand, interest rates, and market conditions can help both buyers and sellers make informed decisions. It's crucial to stay updated on these trends to navigate the market effectively.
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1/26/2024 08:13:50 am
Compound interest is what certain lenders insist on charging borrowers, which raises the total amount of interest paid. The original principle and any interest that has already accrued from earlier periods are both increased by interest on interest, or compound interest. The bank will assume the borrower owes the principle plus interest at the end of the first year. Additionally, the bank projects that by the end of the second year, the borrower will have paid back the whole amount of the initial loan balance, interest that has been collected on that sum, and interest on interest.
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