*Opinion Disclaimer and Disclosure – I cannot stress vehemently enough that this is an opinion only. I am not a lender. I am not an accountant. I am not a lawyer or attorney.
More importantly, I am paraphrasing, and, dare I say, regurgitating what I have heard others say. The reason I feel safe to regurgitate is that, being in the real estate world, this is a regular topic of conversation. After I keep hearing the same thing over and over again, I feel comfortable telling you what I’ve heard.
I have heard this opinion from people in person, on the radio, on TV, on the Internet, in classes and from the stage. I have linked to sources who are saying the same thing (below). I am compiling, in the most simplistic and general way, the common thread that I have heard almost a dozen times since December 2018.
So, without further ado, here are my most general expectations for what will happen with interest rates through 2019.
The Federal Reserve might raise rates two, even three times through 2019.
This is what I’m hearing. The Fed, a non-governmental, yet still nationally impactful organization, threw a bit of a monkey wrench at prognosticators and people who have an interest in the interest rate by announcing that they will consider raising or lowering interest rates every time they meet, instead of the traditional quarterly consideration that it has customarily given to such moves.
So that means they could drop a hike or a lowering on us at just about anytime.
Forbes.com indicated that they thought the Fed was previously mulling between two and five rate hikes between December 2018 and the end of 2019, but columnist Simon Moore wrote that we may see as few as one.
The consensus of the markets for 2019 interest rate moves is quite finely balanced at this point, but suggests more rate increases. Currently the most likely option seems to be a single hike in 2019, especially after Powell’s recent statements that rates were “just below” neutral, rather than a “long way” from neutral as he’d stated previously. Quite an abrupt shift. Nonetheless, between zero and three increases are possible in the market’s view. This is lower than, the Fed policy maker’s expectations of between two and five hikes in 2019…https://www.forbes.com/sites/simonmoore/2018/11/29/what-to-expect-from-the-fed-in-2019/#6a3d5f527af5
According to CNN.com:
In September, nine of the 16 policy makers forecast the Fed should raise rates three or more times next year, while seven officials estimated the economy would benefit from two hikes or less.https://www.cnn.com/2018/12/20/business/federal-reserve-changes-2019-playbook/index.html
Now, back to what I’m hearing from local experts.
We’ll probably see at least one rate hike. Hopefully, if things don’t go perfectly, we’ll only see two. Of course, to us, the Realtors® and lenders helping people in Fort Collins and Northern Colorado buy and sell property, a common conclusion is ‘the fewer hikes, the better.’
That is, unless you are strong believers that the Fed knows what they are doing, and the raise in rates will have some sort of macro effect that will eventually trickle down to us in the real world, and make it easier, in one way or another, for the people of Northern Colorado to buy, sell, and otherwise pay for their homes.
I kind of prefer low rates so my clients can get great monthly payments, but that is just me.
Another way to summarize the outlook for interest rates in 2019 is that we are hopefully optimistic. One to two small hikes could still keep national rates at a reasonable level, in my opinion, for people to be able to buy and sell real estate.
As you may be able to tell, predicting what the Federal Reserve will do is sketchy territory. A forecast of “zero to three hikes,” as is quoted below from Forbes, is like saying, “Something may happen. Or nothing may happen.”
Currently the most likely option seems to be a single hike in 2019, especially after Powell’s recent statements that rates were “just below” neutral, rather than a “long way” from neutral as he’d stated previously. Quite an abrupt shift. Nonetheless, between zero and three increases are possible in the market’s view.https://www.forbes.com/sites/simonmoore/2018/11/29/what-to-expect-from-the-fed-in-2019/#2d85fcf67af5
In the case of how this affects what you do with your real estate situation, the song remains the same. Interest rates are only one variable in the complex picture of where you are in your ability to buy, sell, or otherwise work on your real estate portfolio.
If you want to dive deeper into that picture, please feel free to contact me, and we can have a look at what is currently the best move for you!