Interest Rates and Real Estate
The impacts from historic inflation continue to be felt by consumers especially when filling up your tank or going to the grocery store. As the Fed continues to raise interest rates to tamp down inflation, the impacts can also be felt in the rates you pay on your credit cards as well as the rates lenders charge to purchase or refinance real estate.
Interest rates play a significant role in the real estate market.
The following are some ways that interest rates can impact the real estate market:
Home affordability: When interest rates are low, it becomes more affordable for people to buy homes as the cost of borrowing money to purchase a home is lower. On the other hand, when interest rates are high, it becomes more difficult for people to afford to buy homes.
Home sales: Low interest rates can stimulate home sales as more people can afford to buy homes, which in turn can drive up demand and prices. High interest rates can have the opposite effect, slowing down home sales and dampening demand.
Refinancing: Low interest rates can encourage homeowners to refinance their mortgages to take advantage of lower monthly payments and lower borrowing costs. This can free up some extra cash for them to spend, which can boost the economy.
Investment: Low interest rates can make it less attractive for investors to invest in bonds and other fixed-income securities, causing them to look for alternative investments like real estate. This can drive up demand and prices for real estate investments.
Overall, interest rates play a significant role in determining the health of the real estate market and can have a significant impact on home sales, affordability, and investment.
Rates are always changing so it is important to stay informed on the current rates and market conditions.
If you're thinking about purchasing a home in 2023, make sure to give us a call. We would love to sit down with you and come up with a strategy to help you reach your real estate goals.