REALTORS ALL WATCHING THE FEDERAL RESERVE NEWS TODAY...

Most full time Realtors, real estate investors, buyers, and especially sellers were disappointed to see the Federal Reserve announce higher interest rates yet again today. This marks the 3rd 75 basis point (0.75%) interest rate increase in just 4 months as the Fed attempts to get inflation down to their 2% target rate.

Interest rate increases will typically reduce the affordability of homes by increasing their monthly mortgage payments. Typically interest rate increases harm the most typical mortgage type (30 year fixed) the most, while the 15 and 20 year mortgage rates are affected to a lesser degree. Even small increases and decreases in mortgage interest rates can make or break a home deal toward the top of a buyers budget because interest rates affect the payment so much.

Did you know... A buyer of a $300K property with a 30 year fixed mortgage will now have to pay roughly $400 more per month just from the interest rate increases in the last 4 months. While highly shocking in the short term, it is important to point out that interest rates are still historically VERY low. However, sellers must be aware when pricing their property for sale that many (would be) buyers for their home can no longer afford that the same purchase price they could just 4 months ago.

Are housing prices going up or down?

The short answer is yes this is starting, however, nearly everyone involved has a financial incentive to say this is not accurate and things are just slowing down. The open houses by agents (myself included) have drastically slowed down, the buyer and agent phone calls on listings have plummeted almost irregardless of pricing and marketing strategy. Why would home most sellers, Realtors, real estate agents, title companies, investors, loan officers, and the like not want you to realize the market is not only slowing down but that prices are also dropping? Because it brings their income and profits down drastically. If you are trying to sell your house or you get a commission for selling a home or the mortgage for it, you lose a lot of money overnight if everyone realizes the market is coming tumbling down fast.

Over the last several years, we have all been shocked that housing prices have skyrocketed to new highs well above the statistical average increases in U.S. home prices. But if you look at the Case-Schiller index which is widely regarded as the most accurate graph of housing prices in the continental U.S. you begin to see just how bad this could & many would argue should get. I don't have the permissions to duplicate the graph here, but trust me, it is truly scary to look at especially if you are in this industry with your livelihood dependent on it or you are holding multiple investment properties thinking the market is having a normal cooling off period right now. When the price average housing line continues to spike further and further above the average housing price line for the roughly the last hundred years, and then you see that every other time it has come crashing down well below the average line every single time without fail you begin to wonder why so many would still be buying right now.

I will assume most everyone remembers housing prices in 2007-ish depending on where you were in the country. Virtually everyone and especially the people with incomes tied to the housing market continued to say that everything was great and it was just a market blip and housing prices would start going up rapidly again anytime, ie., don't sell now! Well, against the advice of every Realtor I spoke with back in Iowa at that time I thought the market was too crazy so I sold my little house. It wasn't that I was any more intelligent as I'm confident I'm not. It was that I saw the writing on the wall. The leading markets like: Florida, California, New York, etc., were losing value at an alarming pace. Sellers listing Houses for sale were not asking ridiculous numbers like before, and all of the sudden it was a race to the bottom. Buyers could smell the blood in the water but every month they waited the prices just seemed to get more reasonable. If you look at the historical charts, about every 10-20 years housing prices shift the other direction in a big way!

Fast forward 15 years, and things get interesting. My sister and I are both full time licensed Realtors and both sold our second homes that we didn't really want or need recently. Many of our friends, family, and investor clients have sold their investment homes recently as well. We can see in real time how our super busy circus like open houses have become ghost towns. When holding an open house, now you bring only the cookies you plan on eating, and bring the water you plan on drinking! Don't plan on having that house receive multiple offers in the first weekend unless you really priced it well. Buyers wanting to buy a home now have leverage, buyers looking for a full-time agent are not ignored. They are now highly coveted especially if they are cash buyers. Why? because in June 2022 interest rates increased .75% and again in July 2022 they went up another .75%. Luckily the fed doesn't meet in Aug. 2022, so we can breath even the they have already said they are expecting a unprecedented rate increase when they meet in Sept. 2022. It's no secret that people buy homes largely on mortgages or monthly payment and those payments are mostly affected by the interest rate you get approved for. These interest rate increases plus the unprecedented price increases in the last few years have led to the perfect storm that is creating the black hole in demand while the supply now seems to increase by the week.

The average person then heads over and clicks the Zillow.com or Realtor.com article (which has nothing to do with realtors by the way...) that spins it into a fantasy where prices and demand have just leveled off. See, these sites make money one way: Advertising dollars from the real estate agents and lenders that appear on any given home for sale. In other words, all those agents with phone numbers next to the home have absolutely nothing to do with that listing. Trust me, I get calls They know less than you do about it because their ad appears all over various zip codes that they pay to be in. I sell real estate in primarily Clearwater, Florida; Tampa, Florida; St. Petersburg, Florida; and the surrounding area. We are in a market that feels the brunt of increases or decreases in prices before most of the country. Our market has leveled off significantly compared to anything I've seen in the last 3 years. My sister, a Realtor in Nebraska is seeing the same. Many real estate agents and trainers for real estate agents (who actually works) is beginning to dust off the old "price reduction script"! Right now it is more critical than is has been in the last 5 years to really price you house listing correctly and not try to get too greedy. For photo’s and listing descriptions, now is the time to go above and beyond what every competitor is doing. Your house is highly unlikely to sell itself now. I hate to be negative in this post, but sometimes it's better to be honest. We may in fact get another bump up in price before this all comes crashing down. But right now, you should be selling if you really want to sell in the next decade and also be making sure you are not purchasing a more expensive home strictly thinking that prices will only continue to go up.

Welcome To My New Website

Hello and thanks for visiting. Please bear with me as my old website was hacked, and I unfortunately am now starting all over on the internet... This blog is strictly to help buyers and sellers of homes in the state of Florida and will quickly be covering many of the most common topics that clients from all over Florida have asked me about over the last 7 1/2 years of doing Real Estate as a licensed realtor in the state. As a bit of background, my sister and I both left corporate sales positions to pursue our dreams of being real estate agents after both having some negative experiences trying to hire realtors and get prompt help from them when needed. Believe it or not we both passed our real estate exams within a week of each other. She being a licensed realtor and now Associate Broker (Congrats Sis!) in the states of Nebraska and now Iowa, and myself a licensed agent in the state of Florida working primarily in the Tampa Bay Area. For those of you from out of state or out of the country, this area includes Pinellas, Hillsborough, and Pasco County. Where am I originally from and am I another crazy and lazy realtor who never answers the phone? Short answer, No. You can always call to verify though (I always answer the phone)... I am originally from Des Moines, Iowa in the midwest which is in the center of our country. This is a primarily farming based state that is known for very hardworking and honest people. I originally moved to the great state of Florida back in 2010, and the changes and development in the area since then have been incredible. Almost all the changes have been great with the exception of traffic for those of us who spend a lot of time in the car.