Interest rate increase could cause big impact in housing market

Lynchburg & Central Virginia News

LYNCHBURG, Va. (WFXR) — The Federal Reserve moved up its timeline for interest rates as inflation continues to rise in the U.S. Officials say rates could increase as soon as 2023.

This comes during the biggest spike in consumer prices in about 13 years.

The federal government tries to keep inflation around two percent. The rate of inflation this year is five percent. Economists say it will cost more to take out loans and will have a huge impact on the housing market.

According to realtor Luther Maddy, “There’s a lot of buyers out there looking and just not a lot of houses to be sold.”

He says in March, there were 260 homes actively on the market within Lynchburg and surrounding counties. Although that number crept up to a little more than 300 over the past few weeks, it’s still low.

“The sellers have an advantage, they definitely have the leverage at this point. They can get away with not doing as many renovations, they can get away with upping their sales price just a tad bit,” Maddy said. “They get into bidding wars and you’re seeing houses sold for at least one to three percent of their asking price. If you are looking to buy, don’t try to come into the market and become a homeowner and try to flip it in about two or three years. You will not build enough equity by then.”

According to Christian Jordan, a real estate investor who has been buying properties for about 10 years, “You get good rates if you’re using a bank and if you’re not paying cash for a property then you can get a good deal with a bank.”

He adds that rates are better now than they were a few years ago.

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