Reply to Will DC housing prices rise if/when Fed cuts rates in September?

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Reply to "Will DC housing prices rise if/when Fed cuts rates in September?"

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[quote=Anonymous]It's all a question of what potential sellers do. Right now we have a bunch of people in DC who would have sold in the last couple years but didn't because of rates. Either the high rates turned them off of trying to level up to a bigger house because borrowing money is so expensive or they were afraid to give up their super low rate on their current home or both.

Yes lower rates should raise prices a bit because the cost of borrowing is lower. So a buyer looking at what they can afford on a monthly basis can afford a more expensive house at a lower rate.

But prices are also driven by inventory. If we get a bunch more homes on the market because of the pent up inventory that sellers have been holding onto specifically waiting for a dip in rates that could mitigate price increases. Which doesn't mean prices won't go up but they might go up more modestly than some are expecting.

I think you'll see a variety of different impacts on the market depending on how desirable and in demand the housing is. SFHs in good school districts will likely see the most increase because they always do. You may see less increase or even stagnancy in condos or townhomes that are situated away from desirable commercial districts and public transportation because with lower rates people will have more ability to aim higher.

But there's also just some unknowns here. Inflation is greatly reduced at this point but consumer confidence is still low. We managed to fight that inflation without ever entering recession which is kind of amazing but also unprecedented. I think it's hard to predict with confidence what will happen because there are a number of unusual factors at play and we'll just have to see how it plays out.[/quote]

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