Federal interest rake hike to impact real estate market | News

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LOUISVILLE, Ky. (WDRB) — A recent move by the Federal Reserve System may affect what you can buy.

From car loans, to credit card bills, to mortgage payments. It’s all going to cost more because of the recent increase in interest rates by 0.75%.

“What the Fed is really trying to do is, they’re trying to stop the flow of money, right? Right now, we have a lot of demand, people chasing very few goods with a lot of money and that’s what’s pushing up these prices,” said Jose Fernandez, an economics professor at the University of Louisville.

It is the largest single-interest rate hike since 1994 as a move to help address inflation. One industry dealing with high demand and low supply is the real estate market.

Judie Parks is a Louisville real estate broker for Berkshire Hathaway HomeServices, Parks & Weisberg.

“Some of the houses are still getting 13 to 15 offers on them,” Parks said. “There were times we got even 25 to 30, if you can imagine trying to field all of those.”

Parks said while the rise in interest rates will not be a quick fix for the inventory shortage, it should help more houses potentially go for their actual asking price.

“I do expect the values to start stabilizing,” Parks said. “In other words I don’t expect them to continue to keep going up as drastically as they have. That is what the interest rates will do.”

While asking prices may not be as high moving forward, Parks said potential buyers will need to re-think what they can afford with higher interest rates.

“They’re probably not going to get as much house as they might have gotten before,” Parks said. “Depending upon how much cash they don’t have for down payment and closing costs.”

Parks expects it to remain a sellers market for about another year.

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