Wednesday, May 3, 2017 / by David Wyher
Friends and Clients —
The Fed increased its key interest rate by 0.25% on .
This rate hike has some people worried about the possibility of a slowdown in the real estate market.
Personally, I'm convinced that this won’t happen for three reasons:
1. The Fed's rate hike had no impact on mortgage rates
It's easy to forget that the Fed's interest rate is not tied in any direct way to mortgage rates. In fact, the two rates frequently move in opposite directions.
That's exactly what happened this time. The 30-year fixed mortgage rate was actually lower in the days following the Fed's announcement. The same thing happened the last time the Fed increased rates back in December.
2. Mortgage rates are still at a historical low
Mortgage rates have a long way to go before we would see any impact on demand.
Even if mortgage rates followed any rate increases that the Fed might make later in the year, they would still be lower than the historical average by several percentage points.
What’s more, demand for homes has been outstripping supply for a while, as evidenced by shorter times homes spend on the market and continuing increases in home prices.
And with unexpectedly good job growth at the beginning of this year, demand for homes will grow even further, offsetting any rise in mortgage rates.
3. Homebuilder confidence is at a 12-year high
The National Association of Homebuilders recently reported that homebuilder confidence is currently at a 12-year high.
Homebuilders are expecting the price of future home building to drop because of a loosening of regulations affecting the industry.
Such a decrease would slow the growth of home prices and would lower the incentives for the Fed to make sizable rate hikes down the line.
In short, the Fed's recent move isn't anything to worry about, and the current real estate market still offers great opportunities for both buyers and sellers.
If you're looking to sell a home, you'll profit from the shortage of homes on the market and near-record high prices.
To see what your home is worth in the current environment, check out my home value calculator that takes into account recent Greater Philadelphia sales:
Enter your street address here to find out what your home is worth.
And if you are looking to buy a home, you still have time to take advantage of these historically low mortgage rates. Check out some of the great homes that have recently come on the Greater Philadelphia market:
Click here for all available Greater Philadelphia homes for sale.
If you'd like to talk in more detail about buying or selling your home or you want my predictions for what mortgage rates will do through 2017, just give me a call at 484-804-4700. I'm here to help.
Have a great day,
Keller Williams | MainLine360
484-804-4700 | 610-647-8300