COLORADO SPRINGS, Colo. (KKTV) – On Wednesday, the Federal Reserve raised the interest rate for the fourth time since Mach. Now it sits at 9.1 percent, which is another three quarters of a percentage point from the raise last month.
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11 News spoke to the Lawrence Yun, the chief economist of the National Realtors Association Wednesday about how this increase could impact real estate moving forward. “The housing market, after a two years of exceptional performance, is taking a little bit breather. Home sales are coming down from the super heated pace of last year. So much calmer market conditions but properly priced homes are still selling fast and home prices still higher compared to one year ago,” says Yun.
According to the Colorado Realtors Association, homes in El Paso County have been staying on the market for nearly two weeks. The mortgage rate is set at 5.5% currently. Yun tells 11 News mortgage rates may not move all that much in reaction to the Federal Reserve decision.
“The mortgage rate has already priced and what the federal we doing today or in the upcoming months or even early part of next year. There will be multiple rounds of rate increases by the Feds so the mortgage rates may not move all that much and reaction to the feds decision today,” says Yun.
As we move into the new interest rate, Yun says both home buyers and sellers could be impacted. “First the home sellers need to understand the market has changed. The days of profit gains just add on another 10% to the previous neighbors home price will not work anymore. So they have to be realistic to the market condition. There are fewer buyers in the marketplace and even the homes that are selling today may still be above one year ago but not drastically higher conditions,” says Yun. “The home sellers need to be very realistic to today’s changed market conditions.”
For those who are buying homes right now, Yun says “Stay within budget, don’t over stretch. That always leads to some risk in the future so for people who are staying above the budget and still financially capable, because many people are no longer able to get a mortgage. If one can still get a mortgage that means that you are locking in that monthly payment now and well into the future unlike rents that would be rising.”
11 News also spoke with Joe Craig from the economics department at UCCS who says this interest hike will probably not be the last one we see over the next few months.
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