The Federal Reserve has Cut Interest Rates for the First Time in Four Years
Over the last several years, we’ve seen mortgage rates peak at nearly 8%, existing home sales drop to near 1990’s levels and we hit a 40 year low in affordable homes. Looking forward, the fed expects that there will be more cuts coming which will help change the market trends over the next several months. Even though we won’t see the difference overnight, it’s welcome news for the future of the real estate market.
What Does this Mean for the Housing Market?
With mortgage rates dropping we will see an increase in buyers looking to purchase, which leads to more sellers being motivated to list their home knowing there will be more competition.
We expect to see an increase in homes for sale, along with lower borrowing costs which will help strengthen the real estate market. Demand will grow as we have the lowest interest rates we’ve seen in several years, making homeownership more accessible to a wider range of buyers. This combination of increased inventory and improved affordability is likely to create a more balanced market, benefiting both buyers and sellers.
C.A.R. Releases its Housing Market Forecast
According to the California Association of Realtors: “A more favorable interest rate environment that will loosen up the ‘lock-in’ effect and improve housing inventory will encourage buyers and sellers to return to the market to boost both home sales and prices next year.”
Housing supply conditions will continue to improve, but a moderate increase rather than a surge in active listings should be expected. As interest rates decline and the lock-in effect loosens, more properties will be released onto the market. While supply will remain below historical norms, active listings are expected to increase slightly above 10% as market conditions and the lending environment continue to improve.