Federal interest rate hike causes home buyer frustration
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The half a percent federal interest rate raise is causing more problems for those looking to buy in the housing market.
Real estate sales executive Kevin Kalligher is seeing concerns from buyers start to take root. He says, "I’m certainly seeing a lot of buyer exhaustion as well there’s a lot of frustration out there."
With the Federal Reserve raising rates Wednesday and a possibility of more raises this summer, many are wondering what this could mean as they plan to buy real estate.
Kalligher says, “"If the federal interest rates increase then that could mean an interest rate increase on their mortgage coming as well. Those two rate hikes are a little bit exclusive to one another but we certainly could be seeing rates go from 5.5 to up to 6 and maybe even higher on the short term."
And in that short term the market could be looking at some big changes. Pricing out certain buys in buying their dream home.
Kalligher says, "There’s going to be a demographic that gets shaved off of the market, or there’s going to be some people that get priced out. Just because of the affordability. If you have a house that’s $200,000 dollars with the 2.5 interest rate, there’s going to be a lot more people that can afford that than say with a 6% interest rate."
And if you are a buyer in the market Kevin says you need to be aware of the competition.
He says, "So properties that are sold on the market in the first couple of days, and you’ve got multiple offers… it’s likely going to sell 10-20% above its asking price.”
And as concerns about the interest rate raise grow Kalligher says to stay optimistic for the long term.
"It is frustrating right now. But you’ve got to imagine, we’ve got a lot of millennial population that’s still out there wanting to buy. We’ve got another four years where 5 million people every year are going to be coming into those peak buying years. You got to think this market is going to stay healthy, this market is going to stay strong, and in the long term real estate is a great investment”, says Kevin Kalligher.