Fed Raises Rates...Finally

The Federal Reserve finally raised interest rates yesterday, after a year long break. The rate rise was a shoe-in at this point, given that people had fully expected it since September. Rates had already risen in anticipation, in fact, the 10-year note has been trading around 100 basis points above where it was just a month or two ago with anticipation of both this rate rise, and a stronger economy with a business person taking the White House in January. What does that mean for real estate? Well, higher lending rates certainly, and probably more and freer lending by financial institutions  that have been handcuffed by almost zero rates for about a decade. In other words, people will have higher rate mortgages, albeit at relatively low levels in the long term scheme of things. The offset is that the economy should be stronger, and inflation will likely come back to more normal levels. That means more and better jobs, higher wages and greater potential for some people to get loans. Coupled with the higher rates are a stronger dollar. Not good for people coming to the US, but for us, a great chance to travel overseas at lower prices. The US will remain a safe haven place for international investment, and additional households will be eligible for loans if the anticipation of a stronger economy comes to fruition. So in general, pretty good for real estate, but you won't be seeing loans under 4% again for a long time.