It definitely seems that in real estate this year.The year started out so promising with mortgage interest rates dipping below 6% and inventories of housing on a slow but steady increase.
Inflation is back and so are higher interest rates!
Dated: March 22 2022
Views: 333
Since February of 2021, I have been predicting inflation would return and when it did, the Federal Reserve Board would be forced to cause interest rates to increase. This was not a hard prediction to make even back then as we saw gasoline prices, food prices, car prices and particularly home prices starting to increase at an inordinate rate. Particularly, if you are in the housing industry or trying to buy a house, you know how competitive it has been. A large percentage of listings are selling over full price with multiple buyers in just a few days.
The Federal Reserve Board also known simply as “The Fed” has basically two jobs:
1) to stimulate the economy in recessionary times; and
2) to dampen the economy in inflationary times.
In order to fight Covid, the Fed has kept rates artificially low for a long time. Now that inflation has set in, they have to act to induce rates up to try and slow it down. What sellers and buyers of real estate have to understand, is that for every 1% rise in mortgage rates, approximately 1 million fewer buyers in the US can buy a home.
In the last three weeks, mortgage rates have risen from 3.5% to 4.6%. The Federal Reserves Chairman, Jerome Powell, who has been recommending 4 to 6 gentle interest rate hikes this year of .25% each, is now considering .5% increases.
Matt Carter of Inman News, a real estate related news service, has written a great online article on this phenomenon. I have posted this article on my website, MnHomesbyDave.com under the Real Estate News tab.
Dave and Ann Feerhusen
"Experience you can trust!" I am very fortunate, along with my partner and wife, Ann, to have spent my career of 41+ years helping people successfully market their homes in the Twin Cities. We have ha....
Latest Blog Posts
What Happened to the Spring Real Estate Market?We have really been on a roller coaster, with regards the real estate market, this year so far with some surprises. For the last 12 months prior to
Are you really ready for a typical Minnesota winter? After several years of mild winters, this one is turning out to be much more typical. Lots of cold weather and snow! And although the housing
Now is the time to a Move!Wow! Is there ever a lot going on in the world of real estate economics? Interest rates have finally ticked down a bit after the Federal Reserve Chairman, Jerome Powell has
The data relating to real estate for sale on this web site comes in part from the Broker Reciprocity Program of the Regional Multiple Listing Service of Minnesota, Inc. Real estate listings held by brokerage firms other than REMAX Advantage Plus - Orono are marked with the Broker Reciprocity logo or the Broker Reciprocity thumbnail logo (little black
house) and detailed information about them includes the name of the listing brokers.
© 2026 Realtor Association of Southern Minnesota. All rights reserved. The data relating to real estate for sale on this limited electronic display comes in part from the Broker Reciprocity (sm) Program of the Realtor Association of Southern Minnesota Multiple Listing Service. Real estate listings held by brokerage firms other then REMAX Advantage Plus - Orono are marked with the Broker Reciprocity(sm) logo or the Broker Reciprocity(sm) thumbnail logo (a little black house) and detailed information
