As predicted, the Fed announced a ¼% interest rate rise and set the expectation for three rate hikes this year and next. This is based on data which expects a strong economy in 2018-19 along with increased inflation: Fed Hikes Interest Rates.
As I have discussed in my previous blog this anticipated outcome brought Spring buyers to market early creating a buying frenzy in some areas never before seen. Many of you were able to bring listings to market using the messaging and strategies also mentioned in The Perfect Real Estate Storm and THE NEXT 3 WEEKS COULD BE THE MOST CRITICAL OF 2018 articles. Moving forward here are some changes to expect:
- More listings coming to market now that Spring is here
- Frustrated buyers giving up once Mortgage rates adjust up again
- Longer market times and fewer multiple offers
The severity of the adjustment will depend on how extreme the demand for listings has been in your market. The more balanced and higher end markets will see less pull back or adjusting. Here are some steps to take now:
- Continue to bring listings to market. Most areas still have a high demand – low supply scenario and as a Realtor you always want to be on the listing side. Adjust the expectation to include potentially more competition and fewer buyers at least for the temporary short term.
- Give motivated-qualified buyers hope to continue in that most lenders already front loaded a rate hike this year anticipating today’s news and it may be a while before they realize the next rise so there may still be time to lock in low (check with your Loan Originator- this may vary). Also- more inventory should be coming so circumstances should turn in the buyer’s favor a bit.
- LO’s should keep bringing listing leads to Realtor partners because refi opportunities will become less and less and strong realtor relationships will be critical for success in the future.
At the end of the day, we need to keep the big picture in view. First of all, interest rates are still historically low. It is good news rates are increasing because that means the under pinning of our economy is solid and growing. A rate increase is meant to stave off inflation which includes Real Estate so expect a softening and cooling off period.
There is a lot of business to be had, so get your piece of the pie today!