What Does the Fed’s Recent Rate Hike Mean for the Real Estate Market?

The Fed’s recent rate hike shouldn’t have any significant impact on our market. In fact, it might actually stimulate it.

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On June 14th, the Federal Reserve increased its federal funds interest rate by 0.25%. They’re also widely expected to raise rates once or twice more over the course of 2017. What does this mean for the real estate market?

While any action by the Fed always garners a lot of attention, I believe these increases will not have any significant impact on our market.

These increases will not have any significant impact on our market.

First of all, mortgage rates have actually trended lower in the wake of the Fed’s recent announcement. The 30-year mortgage rate recently hit 3.9%, the lowest level in 2017. In fact, it’s a common pattern for the mortgage rate and the Fed rate to move in opposite directions, and the same thing has happened the last two times the Fed raised rates.

Second, the economy continues to do well. The Fed decided to increase its rate because unemployment and inflation are low, household spending is picking up, and we’ve seen steady growth for the past nine years. This is good news for the real estate market. As expected, we continue to see strong demand and a corresponding increase in home prices.

Third, while the Fed’s rate increase is normally meant to cool off the economy, it might actually stimulate it in this case. Because interest rates were so low for such a long period of time, experts believe the recent increases might ease pressure on the financial system and encourage lending.

Case in point: since the Fed started raising its rate in December 2016, total mortgages are up 2.5% year over year.

In conclusion, while any move by the Fed is likely to lead to a lot of hand-wringing, I believe the real estate market will not be affected and will continue on its own healthy course. Nonetheless, it’s clear that right now is a uniquely good moment for everyone in the real estate market. Today’s low mortgage rates are good for homebuyers because they make homes more affordable.

If you have any questions about our market or you’re thinking of buying or selling a home, give me a call at 614-568-9607 or send me an email at Susanne@SusanneCasey.com. I’d love to help.

What’s Happening in Central Ohio Real Estate?

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Being a real estate agent, I am constantly asked questions about the real estate market here in Central Ohio. I want you to be as informed as possible, so today I am going to share some of the most common questions I get from buyers.  Here are the top 5 questions that people have been asking me lately:

1. Is it a buyer’s or a seller's market?

Right now, due to low inventory, we are firmly in a seller’s market.

2. What does the current housing inventory look like?

We currently have only about 3.1 months of inventory right now. However, depending on the price range you are looking in, things could be a little different. In the lower price ranges ($150k-$400k), we have even less inventory, and homes are selling almost as soon as they come on the market. In the higher price ranges, we might have over a year’s supply. For a more specific answer that pertains to your house or your neighborhood, let us know and we’d be happy to give you an evaluation.

3. How does the current inventory affect sales prices in the area?

Because there is a shortage of inventory, buyers are competing, and that’s driving up home prices.

4. What are interest rates like?

They are still at historic lows, but have the potential to rise quickly. The Fed is meeting this month to discuss interest rates, so it’s possible that we could see an increase very soon. However, we are going into an election year, and usually during election years rates remain more steady.

5. What does all this information mean for me?

If you’re a seller, you need to make sure you are pricing your property correctly. We are no longer in the spring season, and things have slowed down a bit. However, homes that are priced well and look good online will always sell. For buyers, you have time to take a breath and think about what you’re buying, but there will still be good competition on the best homes. Being pre-approved is essential.

If you have any additional questions regarding the market, feel free to give us a call or send us an email. We look forward to hearing from you!