Uncertainty, the Federal Reserve & Interest Rates

Over the past several months, we’ve been hearing about a possible rate increase from the Federal Reserve. Clients and friends ask me all the time about the impact that an increase may (or may not) have on the real estate market. 

I think we are all in need of some perspective on this issue.

Many, many experts were predicting that the Fed would raise interest rates back in September…that didn’t happen. Now we’re hearing that rates will go up in December…just in time for the holidays.

The only thing that is an absolute certainty at this point is that all of the uncertainty is making people extremely uncomfortable. Because there is a lack of information national news outlets are parsing every single sentence that Fed members speak so that they have something to talk about. 

My own personal opinion is this: any impending moves by the Fed are nothing to worry about. I think it’s simply a case of people (namely the media) getting nervous while waiting for test results to comeback. 

In fact, I believe that an increase in the Fed rate will have minimal impact on the real estate market–there are 3 primary reasons why:

1. Members of the Fed are concerned with the shortage of new housing right now — it’s right there in their September meeting notes. Because of this, any actions they take will keep the real estate market in mind.  

2. Mortgage rates often move independently of the Fed Rate. An increase in the Fed rate might actually lead to a decrease in mortgage rates — this is exactly what happened the last time the Fed increased rates, back in December of 2015.

3. The likely rate increase will be small, probably 0.25%. If mortgage rates were to increase by the same amount, they would still would be at historically low levels.

Long story short: the real estate market is strong right now… and it’s likely to stay that way, with or without a Fed rate increase. 

Right now, if you are thinking of selling, there has never been a better time. You can benefit from stable prices and strong demand:

Check out how much your home is worth based on current prices in the Chattanooga Metro Area

And if you are thinking of buying, you can benefit from historically-low mortgage rates so you can afford a great home in the Chattanooga Area:

See available here for homes that are for sale right now across the Chattanooga Region. 

Either way, if you have questions, or you just want to talk about the real estate market–or even what the Fed might do next, give me a call at (423)-664-1900. I’m here to help and I am here to chat. 

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