- The Ragetté Report
- Posts
- How the Fed Rate Cut Impacts Housing
How the Fed Rate Cut Impacts Housing
Plus, How to Price a Home for the Market, Johnny Carson’s Former Home Listed for Sale, and Upcoming Westchester Events.
Ralph Ragetté Jr
September 20, 2024 • Reading Time: 10 minutes
On Wednesday, the Federal Reserve made an unexpected move by cutting its target interest rate by 0.50 percentage points (or 50 basis points). This was the first rate cut in 1,650 days. During this time, we saw:
11 rate increases since early 2022.
Mortgage rates peak at nearly 8% in October 2023.
Existing home sales plummet to 1995 levels.
Home affordability hit a 40-year low.
This is expected to be the beginning of a rate-cutting cycle, with further reductions expected later this year and into 2025.
How the Fed Rate Cut Impacts Housing
The Federal Reserve's decision to cut interest rates is generally positive for the housing market for several reasons:
Mortgage Rates:
While the Fed doesn’t directly set long-term rates like the 30-year mortgage, its policies influence them. With the recent cut already accounted for, we likely won’t see a significant drop in mortgage rates immediately. Expectations are that they will stay in the 6% - 6.2% range through the end of the year, and average 5.7% by the end of 2025.
Housing Market:
As mortgage rates decline, the 'lock-in effect' will ease, leading to increased resale market activity. Lower rates often spur buyer demand. Fannie Mae’s Updated Forecast predicts a 9.8% rise in existing home sales in 2025, reaching 5.1 million, compared to 4.7 million expected this year.
Home Prices:
Real estate markets are shaped by local factors like job growth, population trends, and housing demand. That’s why I track key indicators such as active listings, price reductions, and months of supply of inventory to spot shifts ahead of time. I anticipate the Westchester County market will continue to outperform the national average in price growth, largely due to our historically low inventory levels, and in part because of the decrease in rates.
Refinancing:
Homeowners with existing mortgages may take advantage of lower rates to refinance their loans, reducing their monthly payments and freeing up disposable income for other expenditures. With rates just above 6%, some 4.2 million borrowers could lower their rates by at least 0.75 percentage point in a refinancing, the most since early 2022 according to the Wall Street Journal.
Ralph’s Take
Improving housing affordability is crucial, and the recent rate cut is a positive step in that direction. Lower mortgage rates can bring previously priced-out buyers back into the market, often adding new inventory as they sell their current homes. This should create more opportunities for both buyers and sellers in the coming months.
If you have any questions or want to discuss how this affects your plans, feel free to reach out.
    |
What is My Home Worth? 💰
Over 20 years of selling real estate, that’s the question I’ve been asked the most.
Today, I'm launching the first part of a three-part series on how I price a home for the market.
1. Thoroughly Understand the Property.
To price a home correctly, I need to understand everything about the property. This helps me compare it with other homes and choose the right price. I start by looking at recent home sales in a large area, like the whole school district. Then I narrow it down to smaller areas, such as homes within the same elementary school district, depending on how many similar sales I can find.
Here are the key factors I focus on to make sure the price is accurate:
School Districts: Staying within the same district is a priority, especially in Westchester County. If I absolutely need to, I will expand to nearby districts with similar rankings.
Geography: The closer to the subject property - the better. Unique properties such as farms, equestrian properties, mixed-use homes, or commercial buildings typically require a larger radius.
Home Age: Homes within a 10-year range of the subject property are ideal. If that does not yield enough sales, I expand the search.
Condition: I carefully evaluate the property’s overall condition, including curb appeal, roof condition, interior renovations, age of appliances, and land features.
Size: Start with a broad size range, then narrow it based on results. For example, with a 3,200 sq ft house, I search homes between 2,000 and 4,000 sq ft, adjusting if there are too many matches.
Style: Always consider the architectural style of the home. A modern home in a neighborhood full of traditional colonials may have different market appeal. Adjust expectations based on how common or rare the style is in the local market.
Ralph’s Take
Really understanding your property is only the beginning, but it’s very important. It flows into the other two steps which we will cover in the upcoming editions.
| |
Just out of curiosity… If I could sell my house for $________, I would list my home this fall. Reply or text me (914) 202-1101. I’ll let you know if it’s possible! |  |
Johnny Carson’s Former Home Listed for Sale
This Stone Manor offers a perfect blend of luxury and privacy on a 1.94-acre estate. With soaring ceilings, seven fireplaces, a gourmet kitchen, and expansive outdoor spaces featuring a pool, spa, and sport court, this home is ideal for refined living. Conveniently located near key amenities, it also includes custom offices, a fitness studio, and a garage with charging stations. Formerly owned by Johnny Carson, this home is a true gem. Read More
| |
Upcoming Westchester Events
Septemberfest in Mt Kisco last week
9/20: Oktoberfest 27th tribute to Billy Joel and Elton John, Brewster
9/21: Celebrate Somers 2024, Somers
9/21: Hispanic Heritage Festival, New Rochelle
9/21: Katonah Art Walk, Katonah
9/21: Mooncake Night Market, White Plains
9/21: Lewisboro Library Fair, South Salem
9/21: Ossining Day, Ossining
9/21: Toonerville Music Festival, Pelham
9/21: Westchester Wine Walk, Rye
9/21 - 9/22: Harvest Moon Fall Fest, North Salem
9/21 - 9/22: Captain Lawrence Oktoberfest, Elmsford
9/22: Bicycle Sunday, Bronx River Parkway
| |
Mortgage Watch 📉
Since reaching a high of 7.52% in April, the average 30-year fixed mortgage rate continues to drop. Today’s rate is 6.15%, unchanged from a week ago.
> The rate you may be eligible for can vary greatly from the daily average published via Mortgage News Daily. I use this figure as a proxy for how the mortgage market is shifting.
This market is not perfect. I'm here to help. 🫡
With mortgage rates declining, both buyers and sellers can benefit from the current market conditions. If you’re curious about how much your home might be worth or want to explore your buying options, let’s chat.
Thanks for reading. Enjoy the weekend!
-Ralph