Have you been keeping an eye on the Federal Reserve and wondering how it will affect real estate? You’re not alone. If you’re planning to buy or sell this year, we’re going to break down what’s important about the Fed’s latest action as well as how it could impact the real estate market – and your wallet.
About the Fed’s hike:
On May 3, the Fed announced another .25% interest rate increase. They have been steadily raising rates for the last ten meetings as they’ve been trying to curb inflation. These increases have gradually gotten smaller. Inflation has moderated notably, and we may now be at a point where the Fed feels they can pause any further hikes.
How the Fed affects real estate:
With the Fed signaling a potential end to rate hikes for now, the real estate market is breathing a sigh of relief. This is an indication of a stabilizing economy and real estate market. When the Fed isn’t making any big moves, people generally feel better about buying and selling.
What’s happening with rates:
While mortgage rates do not directly follow the Fed’s hikes, the Fed’s choices do affect mortgage rates. Since the recent Fed announcement and hint at a pause in hikes, we’ve seen a small drop in mortgage rates. If the Fed chooses not to raise rates during their June meeting, we will likely see rates creep lower again. We do not expect to see any dramatic drops, but there’s a good chance that we’ll end 2023 with improved mortgage rates.
What this means for buying:
With inventory tight, buyers need to be ready to move quickly, especially if interest rates drop (as this will cause more potential buyers to enter the market). Odeta Kushi, deputy chief economist at First American Financial Corporation, says that buyers should be ready to move fast if they want to buy a home. The inventory shortage isn’t extreme, “but given that it will still be a seller’s market, [buyers will] likely have to move fast to keep up with that market velocity.”
What this means for selling:
If you’re planning to sell your home to buy your dream home, you also need to be prepared to move fast on the selling side. Your home needs to be attractive to as many buyers as possible. Afterall, mortgage rates are still at their highest levels since 2008. Buyers that will have to pay north of 6% on their mortgage and then put more money into repairs and updates will lessen the likelihood of a quick sale.
You don’t want to be stuck with two mortgages if you get your dream home, and you may need the cash to avoid PMI.
If your home is distressed, needs any updates, or has been sitting on the market for some time, the best option may be to sell to a cash buyer. If you’re looking for a fast, reliable cash buyer, we’d love to help you at MarketPro Homebuyers.
Work with MarketPro:
We’ll give you a fast cash offer for your current home just as it is now; no repairs, no upgrades, no inspection, no commissions or fees. You can even choose your exact closing date. Our team will walk you through your quote, including a review of what your home would likely bring on the open market.
If you’re in Washington, D.C., Maryland, Virginia, Pennsylvania or Florida, we’d love to show you how easy and stress-free the sales process can be. Contact us today for a same-day, no-pressure quote.