Local real estate agents, mortgage brokers prepare for potential Fed rate cut
Realtors and mortgage brokers in Butler County and across America are preparing for yet another major shake-up in the real estate market in the coming months.
What once was firmly a “seller’s market” at the start of the year is slowly shifting toward becoming a buyer’s market, as mortgage rates have gradually started to decline — with the 30-year rate falling from 7.22% on May 2 to 6.46% on Aug. 22.
On top of that, with inflation gradually starting to cool, the Federal Reserve is expected to cut the national interest rate when it meets next month.
Combined, these two factors could bring more buyers into the market, who are willing to look at a wider range of houses at more price points.
“Right now, if you're pricing a home 10-15% higher than what the condition shows it’s worth, it’ll sit stagnant. If you price it 10-15% below, you’ll get multiple offers,” said local real estate agent Sadler Priest. “Once the rates start going down, we might be back into a situation where (buyers) are willing to jump 10 to 15% over asking price to get the house.”
Priest said that many sellers have set their prices in accordance with how the real estate market was two to three years ago, when mortgage rates were at near-record lows. The 30-year rate was as low as 2.77% on Aug. 5, 2021, with the 15-year rate at 2.1%.
“There's a ton of buyers out there right now that are out there,” Priest said. “But sellers are still wanting prices from two years ago. If your price is that 10 or 15% above that, the house usually sits stagnant right now.”
“The problem has been that rates were so extremely low for a few years that homeowners who currently have a 3% mortgage are hesitant to purchase a new home at double their current interest rate,” said Saxonburg-based Realtor Jack Hutterer. “Therefore, inventory is still a bit on the small side.”
“The best time to buy was three years ago. The second-best time would be right now,” Priest said.
Local Realtor Chuck Swidzinski echoed this, saying that for people looking to purchase a home in Butler County, now might be a good time to do it.
“It is a good time now to be looking for a house, as the inventory is starting to pick up,” Swidzinski said. “We are not having as many buyers making multiple offers on homes like we did a few months ago. That was a great time for sellers as they were getting in most cases more than what they were asking for their homes.”
Local mortgage lender Katie Conrad said that Butler County, and Western Pennsylvania as a whole, is a great region to both buy and sell property.
“Through two recessions, and even during the Great Recession, Pittsburgh properties were still appreciating by a percent per year. If you were to have that money in the stock market, you would just now be leveling out on that,” Conrad said. “If I had a time machine, I would go back to 1980, and I would buy up every piece of property I could, because now I’d be a millionaire.”
A potential Federal Reserve rate cut could precipitate a rush of new buyers.
“Lower interest rates are always a good thing for real estate agents, sellers and buyers,” Swidzinski said. “Lower rates always make sales go up. Even with these rates, we still have a lot of buyers out there looking.”
“If the Fed drops rates and that results in pushing rates into the 5% range, I would suspect a surge in business,” Hutterer said.
