Although we have been experiencing one of the longest and longest periods of low interest rates and therefore what is often called cheap money, few people seem to fully appreciate what this means for real estate. market, and why! Very recently, the Federal Reserve lowered interest rates, an additional 0.25%, so how could that affect the market in general and the gist of the housing markets? With that in mind, this article will briefly attempt to explore, consider, examine, review and discuss, 5 possible ways, this economic reality will likely affect many aspects of this reality.
1. Mortgage rates, availability, etc: When overall rates drop, there is almost always an immediate or almost immediate impact on mortgages. This translates to lower monthly transportation costs, on a monthly basis! When it costs less, it means that buyers can buy more home for their money. It means that it is possible to continue with the purchase of a more expensive house and make the same payments. Often times, this translates into higher house costs, because when more people can afford to buy, the economic concept of Supply and Demand kicks in.
two. More house for your payments: Many perceive that this allows them to pay more and, therefore, they do so. They often do not consider that this can, in the long run, when interest rates rise. The value of the particular property could be adversely affected! You also have to consider whether you are experiencing a buyer, seller, or neutral market.
3. Qualified Potential Buyers: Because an important component of the financing qualification formula, which is used to obtain a home loan, when rates drop, and therefore monthly payments, so do, there are many more qualified potential buyers. This makes the owners / sellers start to be in a more favorable position, because it increases the buyers and therefore tends to a seller’s market!
Four. Some owners may list the home earlier: When prices go up and demand increases, this is often accompanied by more homeowners deciding, it may be a good time, to put their home up for sale. In the short term, there may be an impact, which may or may not be the same as the other, in the long term.
5. More refinancing, more general use of credit, etc. Many homeowners decide that it is time to refinance their home loan due to lower rates and therefore cheaper money! It can also result in fewer cash transactions, because it makes more economic sense to borrow funds instead!
When rates go down, in most cases, prices go up, and so does demand! A smart consumer, whether buyer or seller, knows the conditions and proceeds accordingly.
