Federal Reserve Rate Hike Looms Over Homebuyer Demand

The Federal Reserve is widely expected to raise interest rates this week, which could test homebuyer demand. With economists predicting a 25-basis point increase, brokers in various markets are preparing for potential changes in consumer behavior.

In Reno, Nevada, broker-owner Beau Keenan of Dickson Realty expects buyers to show greater reluctance if mortgage rates rise. Historically, rates aren't that high, but combined with record-high prices, a 7% rate could price out some buyers. Every quarter percent can make a difference, and Keenan believes discretionary buyers may again withdraw from the market.

In contrast, Southwest Florida's Anna-Marie Ellison of John R. Wood Properties Christie's International Real Estate doesn't think a quarter-point hike will stop deals entirely. Most buyers are paying cash or aren't stretching on financing, so they're not as affected by payment math. However, it may cause consumers to think carefully before making a transaction.

Brokers in various markets are advising agents and clients to be prepared for the new market conditions. Debra Beagle of The Ashton Real Estate Group of REMAX Advantage emphasized the need for better education and marketing skills as the market shifts. With a focus on affordability, Beagle believes agents with excellent negotiating skills will shine.