The housing market has been hot for a few years, especially in Florida. That market is finally slowing down – and a lot of buyers are walking away from the market because of the rising federal interest rates. Obviously, these rising rates mean buyers will pay much more over the term of a mortgage, but it’s important to understand what’s actually happening with interest rates.
You’d think, because of news coverage about the rising federal rates, that rates are historically high and putting people in an impossible position. What’s true is that the rates are going up, but they’re not going anywhere near historic levels. In fact, the numbers are simply returning more to the norm.
Federal rates returning to pre-COVID levels
At the time of this writing, the federal interest rate sits at 2.33%. That’s obviously significantly more than the true 0.0% we saw for parts of the pandemic, but it’s not any higher than pre-COVID interest rates.
In July 2019, just over three years ago, the federal interest rate was 2.41%. We haven’t even reached that point yet buyers are being told to sit out of the real estate market. Don’t believe the hype – you’re just going to need to factor this into your budget just as families did before COVID.
Rates are likely to rise again
Now comes the bad news. Right now we’re not seeing devastating interest rates as we did in the buildup to the housing crisis of 2008 – but we may get there soon. Federal officials say rates may rise to 3.25-3.5% by the end of 2022. We have to look all the way back to December 2007 to see rates that high.
What does this mean for buyers?
If you’re still sniffing around the real estate market this may be your time to strike. The rates are still sitting at a relatively normal level with some time left before the rate goes up again. This time of year also sets up for some serious steals because of the homes that didn’t get on the market in time for the summer rush.
Should you find something that fits into your budget and fits what you’re looking for then you should strike now. In a few months, you’re going to be looking at tens of thousands of dollars added to your mortgage.
If historic trends continue, it’s likely a sharp rise in interest rates will be followed by a sharp decline within a few years. It’s not time to panic yet, but it’s important to keep an eye on these rates both as a buyer and seller in the Florida real estate market. At the Law Offices of Ray Garcia, we can help you navigate the market and make sure you’re getting the right price for the right home. Contact our team and make sure you’re in the right hands.
Law Office of Ray Garcia, P.A.
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