Last week I asked all of you: How will the recent Federal Reserve increase of rates impact real estate prices? The real estate pros have spoken, the majority think (&0%) think that real estate prices will fall, while 18% felt no impact on prices and 12% think that real estate prices will increase. Why are these results surprising?
What happens to real estate prices with the fed hiking?
I thought the survey results were interesting with the majority of respondents agreeing that real estate prices would fall. What was surprising is that there were 12% of respondents that felt higher rates would actually increase real estate prices. My initial prediction was that it would be 60% that thought prices would fall and 40% that thought prices would stay essentially flat so I was surprised at the 12% outliers in the survey. On a side note, in the comments I didn’t see any arguments for why prices would increase.
Key comments on how rates impact real estate prices
In the comments there primary theme was that inflation was driving the market leading to higher rates and in turn lower prices. Below are some of the best comments:
- The market is still significantly over-supplied with buyers still largely sitting on the sidelines. This combined with general uncertainty, rough news from the political news cycle, election season and historic trending all suggest sellers will have to lower prices as demand simply isn’t present at the moment.
- It is not just interest rates, it is also affordability, and the personal debt levels, as well as national debt, as well as inflation, especially food and energy.
- Fed raises rates → banks’ cost of money increases → Treasury/SOFR/Prime benchmarks may increase → lenders’ required yields increase → CRE loan rates increase.
- Here is the best comment that basically sums up where we are at today: Because we are in bizarro world.
Key insights on interest rate impact on real estate prices
The survey respondents quickly keyed into the underlying issue we are currently facing which is high inflation, high government spending, and in turn high mortgage rates. Higher rates will ultimately lead to a decline in values on the residential and especially the commercial side. The two questions we don’t know the answers to yet: 1) when will lower prices occur 2) how much will prices decline? Unfortunately the answers to these two questions will depend on how inflation goes from here, the general economy, the election, etc… so we will need to stay tuned to get better information. As always, thank you everyone for your participation in the survey and invaluable insights. I appreciate it 😊
Additional Reading/Resources:
- https://www.fairviewlending.com/federal-reserve-raises-rates-yet-mortgage-rates-fall-why/
- https://www.fairviewlending.com/is-your-credit-score-useless/
- https://www.fairviewlending.com/interest-rates-jump-again-are-they-going-to-decline/
- https://www.fairviewlending.com/rates-make-a-u-turn-should-you-panic/
- https://www.fairviewlending.com/will-mortgage-rates-fall-in-2026/
- https://www.fairviewlending.com/where-should-you-invest-in-real-estate-in-2026/
- https://www.fairviewlending.com/fed-drops-rates-why-did-mortgage-rates-barely-budge/
- https://www.fairviewlending.com/phantom-debt-soars-what-does-this-mean-for-real-estate-2/
- https://www.fairviewlending.com/never-buy-a-residential-condo/
- https://www.fairviewlending.com/the-war-on-landlords/
- https://www.fairviewlending.com/house-prices-hit-another-record-should-you-even-care/
- https://www.fairviewlending.com/root-cause-of-real-estate-price-declines/
- https://www.fairviewlending.com/will-real-estate-fall-to-2020-values/
We are a Private/ Hard Money Lender funding in cash!
If you were forwarded this message, please subscribe to our newsletter
Glen Weinberg personally writes these weekly real estate blogs based on his real estate experience as a lender and property owner. I’m not an armchair reporter/writer. We are an actual private lender, lending our own money. We service our own loans and own commercial and residential real estate throughout the country.
My day job is and continues to be private real estate lending/ hard money lending which enables me to have a unique perspective on the market. I don’t accept any paid sponsorships or ads on my blog to ensure accurate information. I’ve been writing this for almost 20 years and have over 30k subscribers. Please like and share my blogs on linkedin, twitter, facebook, and other social media and forward to your friends 😊. I would greatly appreciate it.
Fairview is a hard money lender specializing in private money loans / non-bank real estate loans in Georgia, Colorado, and Florida. We are recognized in the industry as the leader in hard money lending/ Private Lending with no upfront fees or any other games. We fund our own loans and provide honest answers quickly. Learn more about Hard Money Lending through our free Hard Money Guide. To get started on a loan all we need is our simple one page application (no upfront fees or other games).
Written by Glen Weinberg, COO/ VP Fairview Commercial Lending. Glen has been published as an expert in hard money lending, real estate valuation, financing, and various other real estate topics in Bloomberg, Businessweek ,the Colorado Real Estate Journal, National Association of Realtors Magazine, The Real Deal real estate news, the CO Biz Magazine, The Denver Post, The Scotsman mortgage broker guide, Mortgage Professional America and various other national publications.
Tags: Hard Money Lender, Private lender, Denver hard money, Georgia hard money, Colorado hard money, Atlanta hard money, Florida hard money, Colorado private lender, Georgia private lender, Private real estate loans, Hard money loans, Private real estate mortgage, Hard money mortgage lender, residential hard money loans, commercial hard money loans, private mortgage lender, private real estate lender, residential hard money lender, commercial hard money lender, No doc real estate lender
