Buffalo, N.Y. (WBEN) - While we're still another two-plus weeks away from the turn of the calendar year, the Federal Reserve is set to implement one more interest rate hike in 2022.
It is expected on Wednesday for the Federal Reserve to announce a seventh increase in the interest rate this year, likely a hike of half a percentage point to push the benchmark borrowing rates to a target range of 4.25% to 4.5%. All of this is an effort to curb the inflation rate, which is up an astonishing 7.1% from 2021.
With the spikes in interest rates seemingly a regular occurrence in 2022, it has significantly affected the real estate market and the way people buy and sell houses. However, since the last couple of hikes in interest rates, the market has not changed all too much, especially since the start of fall.
"In this market, I think the interest rate going up, as it has and it really hasn't gone up that bad, is just one component of the whole picture," said broker/manager at Howard Hanna Real Estate, Donna Littlefield. "Is it a seller's market still? It is a seller's market, but it's balancing itself out, so you may not pay $60,000-$70,000 over the asking price."
"What we're seeing is not as many multiple offers on houses. I think that's been the most interesting situation," added broker associate at MJ Peterson Real Estate, Susie Lenihan. "We still have, instead of 10 offers, we're having two, maybe, or three. There's still a real demand for good quality properties. If they're in good condition and in the location that everybody wants, the demand is still pretty strong."
While the housing market has not flipped to a buyer's market, realtors have noticed the aggression on the market slowing down. It's all part of the balance starting to take shape with the housing market going forward.
"Instead of paying $50,000 over, maybe you go up a point or so in the rates. It's not a scary market, to me, it's actually a very steady market," Littlefield said. "We're busy, and I don't think it's scary as everybody's making it. I am actually more comfortable with this market than I was with the market last year."
The stock market has anticipated the rate hike that is likely coming Wednesday, which has seen a nice increase over the last few sessions.
So with the upcoming interest rate spike set to be revealed on Wednesday, how might the market change, and what may people see over the coming weeks? Both Lenihan and Littlefield agree that not a whole heck of a lot is going to actually fluctuate with the market.
"The mortgage rates are tied to the 10-year treasury, that's the key as to where that goes. I think that if the rates go up a little bit, so be it. People are still buying," Lenihan said. "If you need a property, you need a property. What we are seeing, but this is nothing new, is not as many houses are coming on the market, because if people are looking to make a move - downsize, upsize - there's nothing on the market for them to buy. So they stay put and don't move, and make an improvement with their existing house. That's been the inventory problem all along."
"We're still in a wonderful market, and again, it's knowledge, and knowledge is power. It's knowing what you want to spend per-month, and that's more important," Littlefield added. "I talk to some agents, it's funny, the newer agents, and we'll use the word DOM - a lot of acronyms in our business - and they don't even know what DOM is. It's 'days on market'. So we're finally getting that back, and that's good news for everybody."
As for the long-term scope of the housing market, that balance taking place is going to be more so of a benefit for buyers looking to purchase a home, but it's also a benefit for sellers putting their house on the market.
"Instead of selling your house in one day, over the asking price and having issues with appraisals, which we've been running into a lot, it's going to bring balance to a market that so desperately needs balance," Littlefield said. "I'm looking very forward to the balance, and to the 60 days on market or 30 days on market, instead of having this market that is just so untouchable for a buyer. I believe it's going to help things for the buyer. It's still a seller's market, I don't think that's going to change, but it is going to be a more balanced market and a bigger relief to the buyer. And I think it's going to steady itself out."
Where this is also a benefit going forward is for the real estate market in Western New York with more people from other parts of the country looking to make a spot for themselves in the region.
"I have some out-of-towners that I did business with this year that are so happy to be in Buffalo. They've all come from larger cities, they're so thrilled to be in Buffalo, liking the properties that I sold them, just liking the vibe in Buffalo and happy to be here," Lenihan said. "All of them say, 'Well, who knew? This is just the biggest secret.' It's a great place to live, the property values are reasonable from where we've lived, and they're pretty happy to be here. So I think we're gonna see the prices flatten out, I don't see any big crazy increases, and I think that's really where we're gonna be. I'm feeling optimistic for '23, I really am."
