How Will Current Interest Rates Affect Home Sales?
Interest rates are at a one-year low and hovering over a two-year low.
So how will this impact the real estate market in 2019? Although it’s impossible to predict the future, typically lower rates bring more buyers into the market. Ultimately, lower interest rates mean more purchasing power due to less borrowing costs.
These low rates may also pressure home prices to increase. With increased buyer demand, and limited inventory, property values tend to rise. When rates are high, buyers exit the market and with decreased demand, home prices will soften.
Is a Recession in the Near Future?
With the 2008 housing crisis still a haunting memory, many Americans have mixed views about if and when we will go into a recession.
But according to realtor.com, this still hasn’t discouraged buyers from locking in an offer.
“Nearly 70 percent of home shoppers this spring think the U.S. will enter a recession in the next three years, but that hasn’t stopped them from trying to close on a home.”
And top economists are still predicting a positive forecast.
“I feel really comfortable that the economy is slowing down this year, but not going into a recession … It doesn’t look, to me, like the odds of a recession in 2020 are there.”
Chief Economist, JPMorgan Chase.
“To sum up the general picture, the U.S. economy is definitely weakening … However, with wages growing at a respectable pace, and job growth remaining healthy, we should see enough consumption demand to keep the economy moving forward. That means slower growth, but no recession.”
Senior Economist, Center for Economic & Policy Research
Buyers should note that the overall climate is different today than it was prior to the 2008 catastrophe. For starters, there are stricter lending conditions in place, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed to prevent predatory mortgage lenders.
There has also been an increase in job growth compared to 2007-2008 providing more people, including many millennials, to get into the market and comfortably afford their monthly mortgage payment.
Is 2019 the Right Time to Buy or Sell a Home?
The current low interest rates can actually benefit both buyers and sellers.
As stated, low rates give buyers more purchasing power allowing them to buy more expensive properties for the same payment.
Sellers also benefit from low interest rates. More buyers mean more multi-bid situations and higher potential to receive top value for their real estate. Also, sellers who plan to finance a new home can take advantage of these record low rates.
Contact Top Novi Realtor, Tracy Wick
If you’re considering buying or selling a home in 2019, this is definitely not something you should navigate on your own. Having an experienced Novi Realtor negotiating on your behalf makes all the difference, allowing you to avoid costly missteps which can save you thousands of dollars.
Tracy is a 25 year veteran real estate consultant and broker representing both buyers and sellers in Novi and throughout Oakland County, Michigan.
Looking for more real estate advice? Contact Tracy Wick today by calling: 248.912.7407 or sign up for our monthly newsletter, The Scoop for the latest news and insider information.