Interest Rates Higher For Longer

After watching Papa Powell’s (Jerome Powell) 60 Minute interview, it appears that the FED plan to keep rates higher for longer…

This affects all purchasing power that relys on leverage from cars to houses to credit cards and business loans.

How will the real estate market be affected by higher rates for longer?

Well, one of two things has to happen in a high real estate value, high interest rate environment. One or both will need to come down.

Housing is the most unaffordable than ever in any time in history. When rates were at 0% for as long as it were, it caused a frenzy in the real estate market.

It caused first time home buyers, institutional investors, small investors and speculators to all come up, bid prices and drive the market higher.

Where the Real Estate Market is Headed in a High-Interest Rate Environment

I am a real estate investor and real estate broker in Florida. I have been in the business since 2002 and can tell you that I believe we will see a lot of turmoil in the real estate market.

The mainstream media isn’t talking about certain things like 1 in 10 FHA loans are delinquent on their mortgages…

One thing can be certain, higher interest rates have caused many price reductions in our local markets here in SWFL. As more inventory comes to market, motivated sellers are forced to do one thing if their home hasn’t sold…. Reduce price.

How We Buy Real Estate in a High Interest Rate Environment

It’s fairly simple. We buy off market properties for one thing. Like using our website to attract motivated sellers. This helps to reduce the amount of competition. If we are buying properties on market, we look for those that are on market for over 150 days. We also search for key words like motivated, must sell, handyman specials, TLC.

Second we look for seller finance deals. We look for properties where we can have the seller be the bank. In turn, we provide a higher price so as long as we get favorable terms (IE – Low interest rate, low payment).

Let us know your thoughts on where you think the real estate market is headed!

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