ow do you think future interest rate changes will affect the real estate landscape?

Question

The future of real estate is constantly evolving, with mortgage rates and rent increases playing a crucial role in determining the landscape. As rent rates continue to outpace mortgage rates increases, many individuals are still shifting their focus toward purchasing property. It's an exciting time for the industry, and as professionals, we must stay vigilant and adapt to these changes. Let's stay ahead of the curve and keep pushing forward!

Josh Young · Answer

@Jorge Vazquez if interest rates drop prices will accelerate, people are willing to pay what they can afford/qualify for as a monthly payment. Prices have already started to move up because people are anticipating the drop in rates in hopes of refinancing in the next few years. Overall housing affordability (as a percentage of income) for renting and buying is a problem and will continue to be because there is a housing supply shortage. I don't think rents are outpacing mortgages, according to Redfin its more expensive to buy vs rent in every major metro in the US with the exception of Detroit, Philadelphia, Cleveland and Houston. But it's normal for it to be more expensive to buy, because you also get principal pay down, tax benefits, appreciation and you can refinance.

Chris Seveney · Answer

Interest rates are not going to be the issue, what is going to be the issue is liquidity and ability to get a loan. If a GSE will not take the loan, its going to be extremely difficult to get a loan funded (primary owner occupied loans).

Chris Merchant · Answer

I heard on the radio that June meeting for the Fed isn't expected to bring a rate hike nor is the July meeting, but after that all bets are off.

Alan Asriants · Answer

I have seen that rents have been stabilizing and each market is hyper local In my market of philadelphia, the city and close surroundings have an insane amount of inventory. Sales and rentals are sitting.The average rental is sitting for 70 days or more. And these are fully renovated.On the other hand, just 20 min north, there is no supply and a good renal is gone in daysThe rise in rates is causing unpredictable changes. As generally speaking rising rates should lower prices. But in reality, people are holding onto their rates and not selling, drying up our inventory.Demand is still way down, but supply can't keep up.No one know what will actually happen. But I think the best thing that should is a steadiness in the rates. They should keep them steady for a couple of years at least. Each change is shocking the market

Konstantin Ginzburg · Answer

I think that the high interest rates will make finding deals more difficult going forward but will means that investors will simply need to be more selective on the properties that they choose to purchase and do more work in order to find those deals. While rent is going up, the rate that rent is going is not keeping up with increase interest payments and insurance premiums. I do not think this will change within the next few years since I think the interest rates will remain in this range for a few years going forward and I don't see there being any large corrections in housing prices to compensate purely because the housing supply is still very limited. Construction has been on-going in many regions of the country but that construction does not appear to be keeping pace with housing demand. I do think there will be opportunity in the next 12-36 months for commercial real estate. Since those properties often have ARM, the rising interest rate can create problems for those owners as interest rates adjust which could potentially cause a surge of commercial real estate properties onto the open market, in turn driving down prices by some measure. It is hard to predict the future of real estate since there are simply too many variables that could affect the industry in the future. Everything from additional severe weather driving insurance rates up further to an intensifying recession leading to increased unemployment can cause shifts in this industry so the best strategy is to remain vigilant and adjust as much as possible to changing trends.

Ray Hage · Answer

I think the high prices and low supply will be here to stay for a while especially in the FL market. I know they are building building building! But it's not too many single family homes coming up. We could see a condo crash though (or at least a correction). Prices are already dropping by more than 10% vs the recent high but I don't see them going down much more. If interest rates drop a lot, we could see more price increases. Personally, I expect interest rates to go down to around 5-5.5% range and stay there for a while but the Fed is a bit unpredictable sometimes.

Bill B. · Answer

Rent rate increases are NOT exceeding the interest rate increases. That’s the problem. Interest rates are up 100% in the last year. Rents are up 5-10%?I’m selling a $370k, 1400sf starter home. The rent was $1800. The fha buyer’s payment will be $2200 plus taxes and insurance. Figure almost $2,500/mo. I’ve never been a fan of renting anything but they’re praying for 3% appreciation or renting is a better deal before any repairs on a 30 year old house.