Last week, I wrote about 8% rates and how they may be here to stay through the end of the year, according to the Fed chief, who updated his thoughts this week: "Federal Reserve Chair Jerome Powell hinted Thursday that the central bank may hold interest rates steady next month amid rising long-term bond yields that could curtail economic growth, effectively doing the work of another rate hike."
At the same time, Powell said an economy and labor market that continue to run hot could prompt the Fed to raise rates again at some point.
8 things about 8% rates
Here's a great summary from from Ryan Lundquist, Sacramento Appraisal Blog.
Higher rates will take more demand out of the market.
We’ve seen an increase in active listings lately due to fewer pendings. This could start to increase more. Time will tell. It’s so important to watch this trend closely.
We’ll have to see if 8% is a psychological barrier for buyers causing more pause.
There will always be some buyers and sellers in any market. Someone told me there would be 0% demand at 8% rates, but that’s fiction.
It seems like mostly everyone got their rate predictions wrong this year, so maybe it’s best to not predict. Even the Mortgage Bankers Association had a 6.3% rate projection for this quarter (they’ve since changed the projection).
Sellers, do what the market requires. Reduce the price, give credits to buyers, buy down the rate, negotiate. There is a smaller pool of buyers right now. It is NOT 2021 where you had total control, and buyers are going to need more help to make things work if rates keep ticking up.
If you work in real estate, you have to be intentional about increasing the size of your network. This is a housing market, where you will hear NO more than YES because supply and demand are so limited. Who are the gatekeepers to the types of work you want to do? Who do you need to get to know? What is your action plan for getting in front of people this week? Who needs your expertise? What types of transactions are happening today, and how can you connect with that target audience? How do you need to diversify your practice?
Last but not least, be full of hope in life, but be realistic about the housing market. Expect low volume and low new supply ahead as we are still in a market where many buyers and sellers feel stuck and unable to move.
Last week, I mentioned that I would put together a list of home projects to consider for the winter. I will publish that soon – it’s not like the winter is upon us just yet!
