How the Fed’s Interest Rate Cuts and the 2024 Housing Market Could Shape Your Real Estate Plans

 

Feeling stuck because of high mortgage rates? You’re not alone. With the Federal Reserve recently lowering interest rates, now is a great time to explore how this change impacts the housing market and your ability to buy or sell a home. Whether you’re in Bemidji or anywhere else, understanding how interest rates, the upcoming Presidential election, and the 2025 housing market forecasts could affect your real estate decisions is crucial.

In this post, We’ll break down the current trends and what you should consider as we head into 2024.

If reading isn't your thing, Tyler made a video going over these topics:


 

The Federal Reserve and Mortgage Rates: What You Need to Know

The Fed’s recent decision to lower interest rates is causing quite a stir in the housing market. While mortgage rates won’t drop dramatically overnight, experts expect a gradual decline through 2025. But what does this mean for you as a homeowner or a potential buyer?

Here’s the thing: the Federal Funds Rate directly influences mortgage rates, and even a small reduction can significantly impact your buying power or make selling more appealing. For homeowners, this could ease the “lock-in effect,” where many feel stuck in their homes because they secured a low mortgage rate during the pandemic—often below 4%, or even 3%. In fact, 85.7% of homeowners with mortgages nationally have rates below 6%.

But remember, trying to time the market perfectly is tough. As Jacob Channel from LendingTree says, “If you’re always waiting for perfect market conditions, you’re going to be waiting forever.” It’s less about finding the perfect rate and more about deciding when the move is right for you.

 


 

What Impact Will the Presidential Election Have on the Housing Market?

As we head into a Presidential election year, many buyers and sellers wonder if they should wait until after the election to make any big decisions. Historically, the housing market does experience a slight slowdown leading up to Election Day, but the good news is that the impact is usually short-lived.

After 9 of the last 11 elections, home sales bounced back the following year, and in 7 of the last 8 elections, home prices actually increased. So, while the uncertainty of an election might feel intimidating, the data shows that the housing market is resilient.

Additionally, mortgage rates tend to trend lower during election cycles, making it a great time to buy a home. While every election is different, focusing on your personal goals rather than election-year anxiety is key.

 


 

2025 Housing Market Forecast: What Experts Are Predicting

Looking ahead to 2025, experts are optimistic about the housing market. Mortgage rates are expected to decline further as inflation eases and the economy slows down. This could mean more buyers jumping back into the market, leading to a steady increase in home sales.

In fact, forecasts from Fannie Mae, the Mortgage Bankers Association, and the National Association of Realtors suggest we could see 5.4 million home sales in 2025, a healthy boost from recent years. This uptick in demand could help unlock more housing inventory, making it easier for buyers to find the right home.

Home prices are also expected to rise at a more moderate pace, with an average increase of 2.6%. This kind of stability creates opportunities for both buyers and sellers, so whether you’re looking to enter the market or make a change, 2025 could be a great time to do so.

 


 

What’s Your Next Move?

The combination of falling interest rates, post-election market resilience, and a positive 2025 forecast presents a unique opportunity. Whether you’re buying your first home, looking to upgrade, or thinking about selling, staying informed and prepared is key.

If you have questions or want to explore your options, we are here to help. Let’s chat about how these market shifts could impact your real estate plans.

☎️ Steve: 218-766-9126

☎️ Tyler: 218-308-1230

☎️ Steph: 218-766-6214

☎️ Jolene: 218-556-0418