What Low-Interest Rates Mean for Agents in 2024
Homebuyers saw mortgage rates drop in December 2023 due to the Federal Reserve stopping their rise of inflation. Founder of Sahm Consulting and former economist for the Federal Reserve Claudia Sahm tells Relator.com, “The direction we’re headed is down this year, but how far down is a big question mark.”
With both interest rates and mortgage rates set to drop, here is what agents should expect for the 2024 housing market.
2023’s High Mortgage Rates Hurt the Housing Market
In 2023, when the Federal Reserve raised its interest rates to battle inflation, mortgage rates rose as well to about 8%. Because of this, homeowners were hesitant to put their homes up for sale causing fewer houses on the market for agents to sell. Also, Massachusetts and New Hampshire real estate saw median prices rise.
More Buyer Clients
Lower interest rates help to make mortgages more accessible. With rates going down, the cost of buying a house goes down. Buyers will be more inclined to buy a house in this climate versus when interest rates are high. First-time homebuyers who might be waiting for the right time to purchase a home might be ready to jump into the real estate market now. Be prepared for an influx of potential clients calling you about buying a house.
More Housing Shortages
Even though mortgage rates are set to drop, there will still be fewer houses on the market for homebuyers. In Massachusetts specifically, there is a housing shortage across the state. Due to this, there will be more competition for buyers when trying to purchase a home.
This will cause difficulty for you and your clients to search for new homes on the market. Be aware that there may not be many options for your clients toward the beginning of this year.
Higher Sale Prices
With demand being more than the supply, sellers can price their homes at a higher range. This will positively affect your client if they are working to sell their homes. There will be more negotiating power for both the seller and the agent.
Strategies for Navigating Low-Interest Rates
It’s important to watch all the current and projected interest rate trends for 2024 and beyond. This will help you understand what next steps you should take. Let your clients know that you can be trusted with all of their questions.
Try building strong relationships with lenders and mortgage professionals so you are in the know of every financial option within the market. Make sure you’re communicating with your clients on what every possible factor low-interest rate could mean for them.
Also, practice flexibility within your pricing strategies and marketing tactics. You might have to consider offering creative financing options or looking at the long-term benefits of homeownership.
Interest rates are always changing due to inflation and other financial factors within the United States. Mortgage rates follow the same trend as interest rates. Determine how this can benefit or prevent you from succeeding as an agent for 2024.