Federal Reserve Rate Cut: Has The Day Finally Arrived?
September 18, 2024, is shaping up to be one of the most significant days for the U.S. economy in recent years. The Federal Reserve is expected to announce its first interest rate cut since the pandemic—a move that could have broad-reaching effects, especially on the housing market and real estate investments.
For months, the U.S. housing market has been stuck in a bind: mortgage rates spiked to their highest levels in decades, pushing many potential buyers out of the market while keeping homeowners with low-rate mortgages from selling their properties. The result? A historically tight housing inventory, paired with continued price growth in many areas.
This anticipated rate cut signals a potential shift. A decrease in the Fed’s benchmark rate could lower borrowing costs for mortgages, encouraging more activity in the real estate market. If mortgage rates drop closer to 5% or below, as some analysts predict, we could see a wave of homeowners considering selling, which would increase housing inventory. On the flip side, this influx of homes could help moderate sky-high home prices, making real estate investments more attractive again.
However, the extent of this impact depends largely on how aggressive the Fed is with its rate cuts. A gradual reduction, while beneficial, may not be enough to motivate many homeowners to act, especially those locked into ultra-low pandemic-era mortgage rates.
What Does This Mean for Investors?
At Lantzman Lending, we keep a close eye on market trends like these because they directly affect our clients and investors. For our clients, the potential for lower interest rates is a game changer for a few different reasons. If you are flipping properties, lower rates should mean increased demand from buyers and upward pressure on home prices as rates drop further into 2025. So, if you are holding inventory now, you may see a little boost in your returns on the next sale. However, investors need to keep there eye on inventory, supply and demand is a balancing act and a significant increase in inventory would have the opposite effect. The net result on home prices could go either direction.
For our long term term rental investors, lower rates may improve your cash flow on your rental properties, and increased inventory will create more selection to choose from as you scour the markets for deals. With more homes likely to hit the market due to the rate cuts moving into 2025, there could be new opportunities for investors to acquire properties at more favorable prices. Whether you’re a seasoned investor or just starting, this could be the perfect time to explore new investments or refinance existing ones to maximize profitability.
Lantzman Lending is here to provide expert advice and flexible financing options tailored to this evolving market. Reach out to us today to learn how we can help you leverage these changes to grow your portfolio!
For more detailed information and personalized advice, visit our website at [Lantzman Lending](https://www.lantzmanlending.com). Happy investing!
