Yesterday the Federal Reserve raised interest rates. They did three times in 2017 and they are expected to raise rates at least three times in 2018. What does that mean for home prices in the Des Moines area and for buyers and sellers?
The first thing to look at is history. Right now we are around 4% interest rate for a typical 30 year home loan. This is still a historically low interest rate. Rates were as high as 18% in 1981, and they have steadily gone down from there. I worked for a bank in 2005 and I remember the loan officers at that time freaking out that interest rates were going as low as 5%!!! They have only trended downwards over the last 13 years, and 2017 was the first time in a long time that interest rates went up. Looking at that history though, we are still on the side of incredibly cheap money.
For buyers this means that mortgages will get a little more pricey over time. If you are looking to buy in the next year or two, buying sooner could save you a thousand or two or three thousand dollars a year. Over the course of a 30 year loan, that is nothing to sneeze at. It wont kill you to wait, you will just have some extra money in your pocket if you don’t.
For sellers this actually leads to an interesting happening: prices will keep going up. What happens is that the interest rates going up will stop some people from buying a home. Those same people will then not sell their current home. The supply of homes for sale then also slows down. Right now we are at historically low inventory levels. We are still hovering around 3000 houses on the Des Moines area market (3063 as of 3/22/2018). People are still moving slowly to get their homes on the market, and that means prices go up because there are so few homes for people to look at. I will also give the caveat that we are actually selling more houses, it is just that they are selling so fast that the active inventory keeps looking shrunk.
What this means for buyers: get a professional to help you. You need to be able to move fast and evaluate deals faster. You need someone who can help you make faster, better decisions. I would love to be that professional for you.
What this means for sellers: getting your house on the market before the market goes Spring crazy means that you get to take advantage of all of the motivated buyers who are out there right now. Don’t wait until you have more competition. Use me to put yourself in the best position possible.
I am an incredibly good agent who always puts my client’s first. I will tell you the truth. I know what I am talking about. Call me today at 515.639.0047 or you can reach me at RyanLynch@KW.com.
~Ryan Lynch
