Interested in learning more about rising interest rates and how they affect the real estate value?
Then you came to the right place.
Read on and discover why this is the perfect time for you to build your dream home.
What causes interest rates to rise?
There are four important elements that drive change when it comes to interest rates:
As inflation expectations rise, consumers think that their money will be worth less. As a result, the increased interest rates are meant to compensate for the perceived loss.
2. Bond supply
Another key driver for raising interest rates is the increased supply in the bond markets. This means that issuers are obligated to borrow at higher interest rates, based on supply and demand dynamics.
3. Bond demand
On the opposite side, a decrease in the bond demand is the main factor that leads to rising interest rates. The explanation is simple: issuers offer investors a higher return in order to raise capital.
4. The Federal Reserve
Last but not least, the Federal Reserve plays its part in the rising interest rates as well.
To put it simple, the Fed tries to manipulate the above mentioned factors by buying and selling assets effectively controlling the market. The Federal Reserve’s actions can also raise inflation expectations, thus impacting the actual interest rates.
How raising interest rates affect the real estate values
In most cases, interest rates adjustments are perceived as independent variables. This means that, while everything else remains constant, interest rates are the only ones that change.
Therefore, the consequences on real estate are pretty clear: interest rates rise and the worth of the money flow that comes from an investment decreases. As a result, the value of real estate property is lower.
DISCOVER THE MAIN BENEFITS OF CUSTOM HOME BUILDING.
Build your dream home with the Built to Suit program!
With the Build to Suit program, you can start building your dream home and enjoy numerous benefits. At Gialluisi Custom Homes, we take pride in collaborating with New Jersey’s top financial advisors – they are ready to help you find the perfect financing solution to suit your needs.
Here are some of the Built to Suit program:
- Build your home on a lot you already have;
- Get help in finding the perfect lot;
- Pick a property from our inventory;
- Customize everything about your home;
- Get assistance during the entire home building process;
- Work closely with professional builders, architect and designers;
- Move in 6-8 months from setting the foundation walls;
- Get help in finding the best financing solutions to suit your needs.
Call 908-206-4659 for details. Peter Gialluisi and his partner Todd Ellner will be more than happy to assist you with any questions you have.