The Impacts of Low-Interest Rates on Real Estate

The federal reserves have cut the interest rates, and it’s the largest cut in rates since the 2008 financial crisis. Central banks change the interest rates in response to the economic activity, instead of high economic activity, high interest rates, it has been slow economic activity therefore bringing low interest rates. With interest rates being low, buyers have more purchasing power then they have had in a long time.
This power comes from simply having more money to spend. Throughout the COVID-19 crisis, less money has been spent in categories such as vacations and entertainment, meaning that that money is now able to be in a larger investment such as a home. With stay at home orders in place (at the time of this being written), more people are looking for more space to make quarantine easier for their whole family. This could come in the form of a work from home office for a parent or a study space for students who are doing distance learning.
How Interest Rates Affect Purchasing Power
The lower rates have had positive impacts on the purchasing power within the real estate market. For example if you are looking at Westlake homes for sale, high interest rates means that the prices of these homes goes up and there is now greater competition for the few homes that are on the market. However, if the interest rate decreases just by one percent, it can lead to large savings in the long run for home buyers.
It is however not necessarily true that this will be the same for people looking to sell their home. Depending on where they are moving, they may be able to afford taking less money on their current home in favor of their new one, particularly if it is not as pricey as an area.
Reaching your goals can mean that you have to make the right investments. Speaking with your Camarillo realty agent, using the right strategy and proper management of your money means you will be able to afford your dream home.