It’s an unusual time for buyers and sellers in the housing market. While buyers are struggling with the growing interest rates, sellers are struggling to make successful deals happen. Sometimes, it may seem like there are no winners in this game. So, how do you navigate this complex industry? The key lies in familiarizing yourself with the ins and outs of the housing market.

Most people tend to assume that it is the interest rates that cause the housing market prices to fluctuate. There are, in fact, several different factors that impact the housing market and, in turn, your home value. In this article, we’ll explain all these factors so that you are better equipped to make the right decision while buying your next home or home refinancing. And with Capitol Lending Group to guide you through the process, you know you’re in the right hands. Contact us today to know more!

But before we get to the factors affecting the housing market, a bit about mortgage interest rates and why they’re considered the common culprits behind rising home rates.

Mortgage interest rate and its effect on Florida home loans

Whenever you apply for home loans in Florida, you’ll find the lenders set the mortgage rates. But it’s really not all in their hands. If you look closely, it’s the Federal Reserve’s monetary policy and other market rates that affect the line of credit. This, in turn, raises or lowers the mortgage interest rates. And the changes in these interest rates directly affect the affordability and price of housing.

If the interest rates fall, the mortgage costs become lower, which gives a boost to both housing demand and the asking price. With lower mortgage rates, people would feel more comfortable taking out home loans. On the other hand, when the mortgage interest rate rises, your monthly payment for loans will increase. Let’s say the interest rate increases from 4 to 6 percent, so this means that a $250,000 mortgage would also increase from $1,194 per month to $1,439. For larger loans, the effect is greater.

On December 14, 2022, the Federal Reserve announced the 7th consecutive hike in interest rates in a year. With mortgage interest rates going up and up, the spending power of people can decrease. And the situation becomes even more difficult when taking out Florida home loans becomes complicated. Whether you are looking for VA home loans Florida, USDA loans, or basic home loans, Capitol Lending Group is here to simplify mortgages for you. Call us today at (954) 533-2024 to find out how!

Other factors affecting the housing market, home refinancing, and home loans in Florida

It’s no news that the housing market is quite complex. The prices in this market are driven by a wide range of factors that can be regional, national, and even global. While mortgage interest rates certainly play a huge role in the prices, there are several other factors, like demand and supply, economic conditions, inflation, demographics, etc., that come into play. Let’s take a look at these –

Demand and supply

Just like goods and services, the housing market also experiences fluctuations in price because of changes in demand and supply. Every transaction in the housing market consists of a buyer and a seller. When there is a low/high supply of homes in the market, the forces of demand and supply come into play, and the prices go up/down. It is known as a ‘seller’s market’ when the supply of houses is low, and the market demand is high. In this kind of market, the sellers would be taking all the shots. But if there is low demand and a high supply of houses, the prices will decrease. It will then be a ‘buyer’s market.’

Economic factors

The health of a country’s economy also plays an important role in determining the prices of the housing market. You might be wondering – what is it exactly that represents the total health of an economy? The major indicators include GDP, employment levels, and the pricing of goods and services.

When the economy is on an upward trajectory, the spending power of people increases, and the prices of homes also go up. Conversely, when the economy is shrinking because of lower demand, lesser confidence in the housing market, and lower demand, home prices will go down.

Demographics

Population demographics is essentially data describing the country’s population. This demographic data consists of the age, gender, and socio-economic status of its people. For instance, if there is a demographic that is experiencing a change in income or has their dependents moving out, it could affect the demand for housing because of higher spending power. By looking at this data, you can get a better idea about the impact of demographics on the housing market, home loans, and refinancing.

Government policies

Government policies can also impact the housing market in a big way. The US government has the power to come out with laws to temporarily hinder or boost the housing demand. The tax deductions on mortgage interest rates is one example of this. In this, the buyers are incentivized to buy houses, which can cause the home prices to rise too. The USDA home loans can also affect swing home prices to some degree. If the government increases the USDA income limitations for loan eligibility, the demand for housing in the market might also increase.

Technology and real estate

This often overlooked factor also plays a role in determining the prices of the housing market. New technologies are making inroads into both the residential and commercial real estate industries. More and more developers are looking to develop tech-friendly homes because of the increased demand for such homes. This again pushes the prices in the housing market to some degree.

Wrapping up

With this, we’ve covered the major factors, besides interest rates, that impact the housing market in a big way. With this information, you’re now equipped to make better decisions when buying your next home or going for home refinancing. And if you’re looking for mortgage solutions in Florida or Georgia, Capitol Lending Group is here to help you with fast and seamless closings.

Have any questions? Mail us at Ryan@capitolLG.com. You can also call these numbers: Florida Office: (954) 533-2024 Georgia Office: (404) 595-2212.