The Federal Reserve is expected to increase interest rates three separate times this year. Here’s what you can expect.
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Interest rates are on the rise in Kansas City. What does that mean for your home’s value and how might it affect your future home purchase?
The entity that sets these rates is known as the Federal Reserve. They meet four times a year, and rates are always a topic of discussion. In 2016, they raised rates in two out of their four meetings. It’s predicted that in 2017, they will raise rates in three out of the four meetings.
Let’s say that during the course of the year, rates go up from 4.5% to 5.5%. Logically, that’s still an incredibly low rate and it is, historically speaking. However, just a 1% increase in interest rates can have a huge impact on a homebuyer or seller.
If you are selling your home and rates go up 1%, that will lower all buyers’ purchasing power by 10% and will lessen the pool of buyers that are looking at your home, dramatically in some cases.
Once rates go up, buying power goes down.
If you’re looking to buy a home and you are qualified for a $300,000 home at a 4.5% rate, you would only be able to afford a $270,000 home with the 1% increase in rates.
If you are looking to buy or sell in Kansas City, now may be the time to take advantage of the market conditions. This will help you get the most possible eyes on your property. Once rates go up, your buying power will go down and so will the buying power of the buyers who would be looking at your home right now. If you’re buying, locking in a rate now before they go up is a smart move. This is simply a great market to be active in right now.
If you have any questions for us or are thinking about buying or selling a home, give us a call or send us an email. We would love to help you take advantage of these rates before their impending rise. We hope to hear from you soon!
