Explaining Our Historically Low Interest Rates
Here’s specifically how interest rates affect the real estate market.
Interest rates may not be the most eye-popping topic, but they are crucial if you want to understand the housing market. Today I’ll talk about interest rates and what might happen to our market if they go up.
I could go deep into this subject because there’s a lot to unpack. But I’ll keep it simple so you can take this information and apply it to your market analysis.
The first thing to keep in mind with interest rates is that they are historically low right now. This means that buying power is high. The lower the interest rate, the more you can leverage the same amount of cash for a down payment. To keep things simple, if your budget is $500,000, you can buy more with lower interest rates than higher ones.
The Federal Market Committee, which is the part of the Federal Reserve responsible for interest rates, has forecasted that interest rates will stay around our current level until around 2024. They won’t even think about changing interest rates until 2023.
Considering this, here is my message to buyers: buy while you can lock in low interest rates. Prices are expensive in our current market, but locking in a low interest rate could save you tons of money on your mortgage in the long term. A good way of thinking about it is that you are paying more now to lock in good interest rates for your future.
Meanwhile, I suggest sellers take advantage of the low interest rate market while it lasts. You can sell your home for a premium, and then use the money from the sale in a down payment. This way, you can take advantage of low interest rates as well.
It all comes down to this: when interest rates go up, home values go down. That’s why I suggest you take advantage of this market while you can. If you are looking to buy or sell, please give me a call at 772-240-0997, or shoot me an email at [email protected]. I look forward to hearing from you.