Beautiful North Fork Produce - Coming Soon!
Last week the Federal Reserve released a statement indicating that they could increase interest rates as soon as June of this year. Since then, there has been a lot of squawking about whether or not this is realistic, and whether or not any increase will be significant. Should you believe that this will happen, this is how the hike could affect almost all of us.
- The Good News: A rate hike means that the Fed thinks the economy is healthy, based on the indicators. While wage growth has been around 2%, not the preferred 3.5%, wages traditionally fall behind the other indicators and is not a required precursor to a rate hike. On the other hand, unemployment is down to its lowest level since 2008!
- Buyers Beware: Mortgage rates will rise. "People thinking of buying a house should act quickly to lock in today's low rates" says Dean Croushore, former Philadelphia Fed economist. We are already seeing an increase in the amount of buyers coming out to the North Fork to take advantage of low rates, as well as many local buyers who can now afford to purchase a year-round residence. Competition is up since there is not a lot of inventory available yet, and we have seen an increase in bidding wars or multiple offers on properly priced homes.
- Sellers Beware: Mortgage rates will rise! (As will auto loans). If you read the above, the downside for sellers is that some buyers will no longer be able to afford to purchase at current prices, and we may see a price drop. Right now is a GREAT time to list your home for sale, before any significant changes occur in the financial markets.
- Stock Volatility: Any increase in interest rates could make stocks less attractive to investors, and possibly trigger a 'correction' (drop) of 10% or more. This will make 'savers' more profitable since interest rates will also increase in bank savings accounts, and also make bond investment more attractive.
- The Real Deal: No one knows when (or if?) this hike will happen, but chances are very good it won't be before June, possibly as late as September. This gives buyers a chance to lock into a great mortgage rate, and sellers a window to list and sell their home before a rate increase stalls or reduces any recent gains in selling prices.
Working hard to bring East End buyers and sellers together - Certified Buyer Representative - call me today at (631) 766-2598
