Bad News For Real Estate…?


Real Estate Mortgage Interest Rates just hit 8-year highs and began passing 5%…here’s what I think this means for the future of real estate values. Enjoy! Add me on Snapchat/Instagram: GPStephan

Join the private Real Estate Facebook Group:…

Get $50 OFF FOR A LIMITED TIME: Code THANKYOU50 – The Real Estate Agent Academy: Learn how to start and grow your career as a Real Estate Agent to a Six-Figure Income, how to best build your network of clients, expand into luxury markets, and the exact steps I’ve used to grow my business from $0 to over $120 million in sales:

Within recent weeks, the FED increased interest rates WAY faster than I expected they would; This is the HIGHEST mortgage rate we’ve seen in 8 years, since real estate hit its bottom in 2010. Now the reasons WHY the FED raised rates seems fairly logical to me – for the last few years, interest rates were pretty much in NEGATIVE territory, meaning they’re losing money just by loaning out money.

First, cheap rates are meant to help the economy. Lowering interest rates made money cheaper to borrow, which meant more money could flow freely through the economy through cheap lending, and that in turn, meant more money in our pockets, which means more money we can spend. This works in the short term, and there’s nothing wrong with doing this for a little while…but eventually we battle fears of inflation, which means our money, over time, continues to have less and less purchasing power.

Secondly, interest rates are only raised in a healthy economy. It’s these types of markets that can handle a rate increase like we’ve seen.

Third, the new tax plan caused businesses and individuals to keep a LOT more money, and by doing so, it became that much more profitable. In return, stock prices soared knowing that companies would have a lot more profit at the end of the day.

So lets talk about how this specifically relates to real estate.

First point, inflation…from a real estate person’s perspective, we LOVE inflation. This is because the value of your asset or property generally goes UP, while the amount of debt you have stays the exact same and the AMOUNT of that debt actually goes down. But this is bad for everything else.

Second point, the higher the interest rate, the more expensive it becomes to own real estate or borrow money.

Third point, I should break down into three thoughts:
People can’t bid as aggressively as they once were able to.
Second, over the last year, many of the buyers were buying because they had a sense of urgency to lock in an interest rate before they went up.
Third, we’ll continue to see a lack of inventory which will keep prices from falling too dramatically. Most people who bought real estate did so with a significant amount of money down, with great credit, and sufficient income…the variable here is that most of these people took out an interest rate much lower than they’d pay now, and because of that, if they sold, they’d give up a historically low mortgage.

This leads me to think that a few things are likely to happen. Mainly that this is a GOOD thing for landlords and the rental market. I think we’ll see a lot of buyers sitting on the sidelines just waiting to see what happens and if affordability gets better. I think we’ll get a bigger selection of tenants from the buyers that aren’t buying.

I think we may also see more landlords deciding to RENT their homes out instead of sell. This means we’ll continue to see less inventory on the market, as selling just doesn’t make sense for people with 30-year mortgages.

For business inquiries or paid one-on-one real estate investing/real estate agent consulting or coaching, you can reach me at

Suggested reading:
The Millionaire Real Estate Agent:
Your money or your life:
The Millionaire Real Estate Investor:
How to Win Friends and Influence People:
Think and grow rich:
Awaken the giant within:
The Book on Rental Property Investing:

Favorite Credit Cards:
Chase Sapphire Reserve –
American Express Platinum –

Products You May Like

Articles You May Like

Channel Your Retro Tacky Soul On The Jersey Shore
3 Tips for Investing with a Partner
Falling mortgage rates boost homebuilder confidence, but not new construction
Temporary Buildings Are an Effective Solution When Compared To a Traditional Building

Leave a Reply

Your email address will not be published. Required fields are marked *