We've had some big news over the past few months in the home markets. Federal Reserve increased the overnight lending rate by 75 basis points to fight inflation in September. In addition, August home sales were down. What does this mean to you as an agent, a buyer, a seller, or an investor? Let's break this down.
Federal Reserve Rate Increase
While the Federal Reserve recently raised the interest rates by 75 basis points, we haven't seen the 30-year mortgage go up by 75 basis points. Why? Well, this higher rate was already priced in the market, so lenders were already lending at around the rates the Fed moved up to. That does mean that we're likely to see rates in the private markets move up soon, though, in time for the Spring/Summer season next year.
August Home Sales Numbers
When the August home sales were released, we saw included a rise in home sale prices of about 7%. What does this mean with home sales being down? Looking at the numbers, for 2022 we're at about pre-pandemic numbers, 4.8 million homes sold in August of this year compared to 5 million homes in August of 2019. This is a sign that we're coming out of the pandemic with the market ready to move.
The home prices rising even though sales are down, however, means that inflation may still be a problem. It's been on everyone's mind throughout 2022. If prices continue to go up, we're likely to see interest rates rise again from the Federal Reserve, sometime next year.
How Does This Affect You?
For sellers, make sure you're pricing to the market and the value of your home. Don't price high just because the market is up. Talk to your agent. What is the value of your home? What will it sell for in your market?
If you're a buyer, you have more say right now in what you can ask for from the seller. You have room to negotiate or ask for inspections. You can negotiate things like seller credits.
Remember that a home is an investment. Higher rates and higher prices don't have to price you out of the market. If you buy a home at a good price, you can look at refinancing options down the road. If your cash flow is positive buying the home, where you're spending less than you would spend on rent while investing in equity, then it's a net benefit to buy now.
For investors, prices and rates fluctuate. This market is no different for investors. As with homeowners, you can look at refinancing options down the line. Remember, you're looking at building value either through improvements and resale or through rental income.
Are You Buying a Home?
Let me help you or your clients reach their dream of home ownership. Go to www.meetwithmarat.com to schedule an appointment and talk about your or your client's options.
Commenti