The housing market has been recovering very slowly for a very long time. In addition, the Federal Reserve has had interest rates near zero for almost seven years now. Both of these facts are expected to change in the near future, though. As the central bank begins to withdraw some of its huge stimuli shortly, the housing sector should be expecting a change.
“The Fed is keen on not shocking the system,” Svenja Gudell, Zillow’s chief economist, stated. “I don’t think we’ll see rates jumping up tremendously; we’ll see them growing over time,” Gudell reported to CNBC.
According to Zillow data, home values are currently rising at the fastest pace since November of last year, up 4.3%. Homeowners may very well be acting cheery while sensing an upcoming end to the end of loose monetary policies.
“We’re seeing home value appreciation still at a very robust rate. The problem right now is low inventory and that’s really driving up these home values,” Gudell, who runs the real estate website’s economic and data analysis of the U.S. housing market, said.
But how will people respond if the Fed does raise rates at the meeting next month?
“It’s tough for buyers now in general. For most people right now it’s a seller’s market,” Gudell stated. She also said that the market was “extremely competitive.” Consumers seem to be “putting in multiple offers. It’s hard finding an available house out there,” she added.
Gudell says as the “middle of the country is a bit more relaxed,” the recovery of the housing markets has been driven by some “hot markets,” such as Denver, Dallas, Seattle and the Bay Area.
“A lot of first-time homebuyers are relocating because that’s where the jobs are. You’re moving to San Francisco, you’re moving to Seattle, you’re moving to Denver following the jobs,” she stated. “That’s where you’re going to buy your first home and that’s where it’s so tough.”