Rates and Residential Choices

US 10 Year Rates

US 10 Year Treasury Rate (I:10YTCMR)

Today, the Federal Reserve gives an update on economic conditions determining policy decisions.  The key to the discussion is where interest rate policy is headed.   Real estate grows or slows because of the availability of financing.  The Fed’s mandate to control inflation and target desirable employment levels is reflected by the increase or decrease in interest rates primarily.  In October, 2023, residential mortgage rates for a 30-year loan hit 8%.  As of today’s Fed meeting, a 30-year mortgage sits between 6.6% to 7% dependent on lender qualifications.  The 10-year treasury rate is currently 4.03%.

As the Spring residential real estate market approaches, agents, lenders, buyers, and sellers are keenly aware of the Fed’s policy.  A lower rate will further enable buyers to qualify with lower mortgage payments.  Left unchanged, seller pricing decisions become central to the amount of demand found for one property over another.  Effectively, rates are anticipated to fall by year’s end.  The speed of that drop is why the Fed’s policy decision matters.  The housing supply nationally remains underbuilt by approximately 3 million units annually.  As residential markets are driven locally, sellers and agents are constantly determining how the shortage applies to pricing for a timely sale.  In Denver Colorado, demand has shifted depending on a home’s price point.   The supply is averaging less than 2 months vs 12 days typical in 2022.   If interest rates are lowered expect housing pricing to stay unchanged because of supply.  Should more buyers enter the market, the limited supply of quality homes will likely ensure faster sales and a return to competing offers.  The increased bidding with lower rates will cause a rise in home prices.

The seller’s decision becomes less likely between investors but with buyers making the move because of life changes: Jobs, Marriage, Divorce, Newborns, or generally Downsizing/Upsizing.  To understand your neighborhood-specific factors reach out to a licensed real estate agent familiar with your market.  At MASONmodern.com licensed agents work with buyers and sellers to find the right outcomes considering specific situations in Colorado and the Denver metropolitan area.  This Spring’s selling season will undoubtedly require experience found with notated agents in your respective market.

Author: Contributors

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