Will our taxes go up? Will this law be passed or this law be stopped? Who will lead us the next four years? There’s a lot of anxiety and questions surrounding this year’s election. The great news is that the results will not have a real impact on your home prices, at least for a while. It starts with the fact that interest rates are not set by politicians, they are set by The Fed, which is an independent agency. They are not political and therefore not impacted by politicians.
Interest rates went up because of inflation and that’s why they have remained up. From a real estate standpoint, the increase in rates has severely slowed not only the rate of sales in the market, but it has also started to cause the lowering of prices. The job market remains strong and interest rates have not kicked out all the buyers. It just takes time to find the right buyer or seller in this type of market.
Interest Rates Are Not Impacted By Politics
Again, The Fed works independent of politics and therefore is not influenced. They base their decisions on economic data. Right now, the economy is strong, the markets are strong, home values are remaining up and so forth. However, the cost of living has become too much for many which is why interest rates have had to stay up.
The higher the rates, the less people can borrow which means a dip in sales. We’ve seen it in several areas including real estate and automotive. Sales are down in the middle-class sectors and that’s never a good sign for any economy. However, while numbers are down, that does not mean they are not still strong.
Mortgages Are Very Strong
Over 80% of properties owned in most areas now have mortgages with low interest rates. That means that current rates are not going to influence foreclosures for years, keeping mortgages strong. If you want to sell your house in a week you can. You just have to drop your assking price down 10-20% and you will see real offers.
Buyers are being patient right now because they have to be. Not every property is as valuable right now because each buyer has to take into consideration the work that a property needs if it’s going to go up in value. They also now have to consider the time they will have to wait because of the current market.
Job Market Is Still Showing Strong Numbers
Unemployment numbers remain low and people are working. The problem is not a lack of work, it’s that things are too expensive right now. That’s where inflation is impacting the economy the most. People are able to find work and that will only pick up as the holiday season begins. Seasonal work is always a big boost for the economy and this year is expected to be no different.
It’s important to note that people are also more informed on what’s going on, not only with the economy and politics, but also with their own finances. They understand where they are in the market, with their jobs and more. The economy shows that while there is strong debt, people are being a lot more cautious with their money as well, understanding that there could be a dip next year.
Inflation Is The Key
Inflation is keeping interest rates up. Regardless of who wins the election, until inflation goes down, interest rates cannot get lowered. The good news remains that home values are not dropping. They remain strong and that’s what buyers and sellers are noticing the most.
Local politics will have a bigger impact on your real estate market right now than national ones. Focus on local politics and learn who and what you are voting for. That’s the best way to have a good sense of what’s going on in your real estate market and what to expect moving forward. Yes, national information is valuable, but local knowledge is far more important to you.
