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John Burson  edited Thursday, February 1, 2024 |
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How Will a Rise in Interest Rates Affect Real Estate Investors
Brian Carpen, an Editor for the ‘The Banker,’ points out interesting facts in regards to the risks of avoiding increased interest rates. A decision made recently by the Fed has led a few folks to celebrate, but most people are still stunned by the move.AD
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Many people are aware of the long-term economic impacts of increased interest rates, and it is important to understand that this is a major challenge for real estate investors. The type of property investors focus on can determine how much of a challenge this presents.
Low-interest rates have led to one of the biggest challenges for home flippers, who have now started targeting first-time home buyers. Carpen, an expert on the subject, believes that low interest rates are here to stay and that even slight adjustments could result in an increase in interest rates. According to Carpen, new-generation homeowners believe that interest rates will continue to decrease. He compares this to the time when a 30-year mortgage had an interest rate as low as 9%. If interest rates were to rise, it would be difficult for borrowers to adjust to the new changes.
Carpen also believes that raising interest rates would come as a surprise to some new generations of borrowers, with politicians attempting to delay the process. This delay could slow down the process, leading to someone else occupying the office and dealing with the uncertainties caused by the wait. This situation would be similar to how the current government took office during a "managed depression."
Real estate flippers who target first-time home buyers will still face the challenge of increased interest rates, which could result in the loss of potential buyers. The effects of increased interest rates on different real estate properties are still unknown. Do you have any thoughts on how increased interest rates could impact those wishing to invest in real estate? Your opinions could be positive or negative, depending on the properties invested in.
