Publisher Theme
Art is not a luxury, but a necessity.

Rising Interest Rates And The Housing Market

0

For projecting property market trends – or indeed, for understanding house prices in general – you need to have a firm grasp of the effect of rising interest rates. There is no real estate brokerage worth its salt that would neglect what is nothing short of essential knowledge for anyone either buying or selling a property. At the time of this writing, the U.S. is going through a period of pronounced inflation, and this is causing rising interest rates and is having several other effects on the housing market.

But before going on to the effects of this recent phenomenon, it is important to first understand the fundamental relationship between inflation and the property market. In other words, you need to understand the general relationship before making sense of the current situation.

Inflation and the Property Market

Inflation and rising interest rates are phenomena that show the economy is, in general, growing. Part of this growth will often manifest within the housing market itself, and under normal conditions, interest rates will rise along with growth and property prices. Taking a longer-term perspective, this is what we generally observe in property markets as being healthy.

However, on shorter timescales, sharp increases in interest rates can cause a pronounced hike in property prices. When this is the case, mortgage loan costs tend to shoot upwards as well, simply making homes more expensive for buyers (and to such an extent that demand suffers). In such cases, it could be necessary to lower home prices in order to attract buyers. This is good for buyers who can temporarily escape the general effect of the wider economy on house prices; of course, it is very bad news for home sellers.

In any case, it would be fair to say that inflation rates that are rising too quickly are, across the board, a bad thing and will hurt the property market. Buyers are often priced out of the home they are seeking, and sellers find it more difficult to attract buyers. Unfortunately, it is such an economic situation that is affecting the U.S. right now.

The Importance of a Good Real Estate Brokerage

So, if you find yourself in the position of either buying or selling a property in the current climate, then the best way to navigate such a tricky situation is undoubtedly to enlist the services of a quality real estate brokerage.

CityHome Collective, a real estate brokerage in Salt Lake City, Utah (which is currently experiencing quickly rising inflation rates) say that such a situation inevitably makes the property market volatile and subject to change. This is because such a situation is not tenable in the long term. Accordingly, the way through the problem is to be able to accurately predict where the market will go next – and in such situations it can certainly change quickly.

To do that accurately, you need a realtor with access to a great deal of useful market data as well as the professional expertise to advise effectively. Only the best and most qualified realtors can offer such advice, and it must be said that in situations of rising inflation, effective predictions are simply beyond the abilities of individual buyers or sellers.

Last Word

Sometimes rising inflation can cause rapid price growth; sometimes it can actually put the brakes on that same price growth as sellers are compelled to lower their asking prices. The only tangible way to know how to act in the present or, more often, what market change to hold fire and wait for, is to consult the professionals – and to make sure that they really are professionals.

Leave A Reply