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What the interest rate hike says about the spring market

Key takeaways from a talk with real estate agent Gary Newville

Created date

May 5th, 2017
Senior couple in front of pretty house with "Sold" sign displayed.

"Make sure your home has 'curb appeal'."

An interest rate hike by the Federal Reserve seems inevitable—it’s not a matter of if, but when. In March, Federal Reserve Chairwoman Janet Yellen said the central bank would likely enact the first rate increase at its next meeting, according to The New York Times. Yellen also said that the Fed would also potentially raise rates twice more before the end of 2017, ultimately bringing rates to a “neutral level” after several years of low interest rates intended to stimulate the economy by making it easier for people to borrow money in the aftermath of the financial crisis of 2008.

But now, with interest rates likely to go higher in the near future, what does that mean for the real estate market? 

We tapped Erickson Living-preferred real estate agent Gary Newville of Hall & Hunter Realtors in Birmingham, Mich., to tell us what to expect of the local real estate market this spring. 

Each Erickson Living community, like Fox Run in Novi, Mich., provides complimentary coordination of all realty and moving needs, including selection of a preferred real estate professional as well as downsizing, home staging, and packing. Newville is one of several preferred agents recommended to prospective Fox Run residents.

Steady market

One key takeaway from our conversation with Newville: If you’re looking to sell your house, you might be wise to do it before the Fed enacts all of the anticipated rate increases.

“If the rates go up over a couple points, then it will slow down the market and push some first-time buyers out,” Newville says. “It also will keep the prices subdued until the rates go back down.”

For the time being, Newville says, the Michigan real estate market remains steady and strong. Spring is typically one of the busiest seasons for buying and selling houses, and current interest rates still make mortgages attractive for buyers. 

“If rates go up one or two points, we don’t feel it’ll have a huge effect on the buying market for those that are employed and making a decent income,” Newville says. “On a historical perspective, interest rates are still an excellent deal.”

At the end of the day, no one has a crystal ball that can tell us what the future will bring with regard to interest rates or other economic factors. So, Newville says, when you’re ready to sell your house, then it’s always the right time to do it.

“It’s always good to market your home and not wait to see what the future will be,” he says.

What buyers want

For Michiganders hoping to sell a house in Detroit and surrounding areas this spring, Newville also offers some insight as to what today’s buyers want. 

Prime locations and good schools remain top criteria for people looking for new homes, and Newville says current buyers may not be very interested in a “fixer-upper.”

“Buyers seem to be working a lot and do not have time to redo—they would rather purchase a home that has been well maintained and up to date,” he says.

So, what can you do to nab top dollar when you sell your house?

Tidy up your home on the inside and outside. Small tasks, like applying a fresh coat of paint and removing clutter, can go a long way. 

And remember that potential buyers will form their first impressions of your house based on the front yard and entrance. Newville says to make sure your home has “curb appeal.” Colorful flowers in window boxes or pots, a freshly painted front door, and new house numbers are all inexpensive ways to make the exterior of a house more attractive. 

Choosing a real estate professional may be the most important decision you make in the process of selling your home, Newville says. You should work with someone who you are confident has your best interests at heart. 

“You must feel comfortable with the agent you choose and not be talked into something that seems too good to be true,” Newville says. “The agent you select is there to guide you, give advice, and negotiate on your behalf.”