Mike AndesFounder, Augusta Lawn Care and Homeworks · Founder of Homeworks and Augusta Lawn Care

What will happen to real estate!?

26 Sept 2024 · 1 min

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0:52

YouTube video by Mike Andes discussing how changing interest rates could affect the real estate market. Andes explains two diverging views: (1) lower interest rates make mortgages more affordable, prompting buyers to purchase larger/more expensive homes and stimulating the economy; (2) lower rates free up sellers who were previously 'stuck' (unable to buy elsewhere due to high rates), triggering many simultaneous listings that could saturate the market and depress prices. He frames the Federal Reserve as "threading the needle" between these outcomes and references debate about the timing of past rate increases.

Chapters

Because there's two diverging thoughts on this. And there's like one is that by reducing interest rates now people can afford a bigger house because the cost, the mortgage is going to actually come affordable. People want to spend more money because the cost of capital is lower and that we're going to go, the economy is going to rip. The other alternative opinion is that now with interest rates being lower, the pent up demand of people that want to sell their house over the past three years that haven't because interest rates are high and they can't buy into another market, all of a sudden they're like, okay, now we can sell, there's buyers in the market and then they sell and then buy. By too many people doing that, you saturate the market with a bunch of sellers. By doing that, you collapse the market. There's two different schools of thought on it. The Fed is trying to thread the needle. And so for some people, they're like this too soon. Well, they really, really increased rates too late a few years ago and that's what led to all the inflation. And so I think they're just trying to get ahead of what they kind of feel could happen over the next year or two.