Earlier this year, I shared my thoughts on what is going on with interest rates this year. If you remember back to January this year, interest rates were around the 5-6% mark. This was a break from the 7% we saw in 2022. However, midway through 2023, we see interest rates rising again. When you’re buying a new house, there are two things most home buyers will focus on: the interest rate and the home price, so to most buyers the interest rate hikes are big news. I’m here to educate you about the latest news and what my recommendations are for my clients:
How many rate hikes have there been so far in 2023?
If you’ve been following the news, you’ll know that the Federal Reserve insisted on a Rate Hike pause in June 2023. However, there have already been two other rates hikes in 2023. It’s an interesting time in real estate buying and selling to say the least. As of May 2023 the federal reserve raised rates twice so far: once by 0.25 percentage points and again by 0.75 percentage points.
What does a rate Hike Pause mean? Will rates rise again this year?
A pause on interest rate hikes mean that the Fed has declined to raise the percentage points for the third time this year. Typically they pause to monitor inflation rates and overall market activity as compared to the last time rates were raised. It’s anyone’s guess as to whether the rates will raise again with experts who have evidence that either outcome could be true. Overall, it will depend on inflation rates and general market activity across the country. If you’re in the market to buy or sell real estate in Denver, I don’t recommend pausing your home ownership dreams just for a rate hike that may or may not come to fruition.
How do interest rates impact home prices in Denver?
As I’ve said before, interest rates influence how much a mortgage is both in a lifetime and a monthly payment. Overall, it is no surprise higher mortgage interest rates slow down the real estate market in Metro Denver and nationwide. This also influences the refinance market as I recommend those who can improve their rate by 1-2% to do so, but otherwise to wait for a bit longer. However, even with that the Denver real estate market is still hot and we’re still seeing a lower inventory when compared to the active market of those who are looking to buy regardless of interest rate news. Overall, and not just in real estate, Denver is seeing slightly higher inflation rates as compared to other cities and the laws of supply and demand are not seeming to dull market activity which leads some economic experts to conclude that Denver residents have overall strong financial health and keep active in the market.
What do I recommend to my clients in regards to waiting on interest rates?
I don’t recommend buyers or sellers should put their home ownership dreams or plans to move on hold because of what the Fed may or may not do. I recommend that if a buyer dislikes their interest rates for now, they can always refinance later. Remember that interest rates are just one factor in real estate and that inventory in Denver and overall supply and demand is also a very important factor. If you’re in the market to buy or sell, please continue that journey and I will be with you every step of the way to answer questions and offer advice.
Do you have any lingering questions on interest rates? Are you in the market to buy or sell your home? Call and text me at (720) 323-4176 or email me at [email protected]
