Market shifts and interest rate adjustments create uncertainty, but real estate still offers long-term opportunities.
Interest rates have recently gone up, creating uncertainty in the market. As I’ve been watching these changes unfold, I’ve noticed that when there’s volatility, such as changes in pricing or risk perceptions, investors tend to react. If they’re uncertain, they pull back, but if they feel confident, they lean in. This is a natural response to higher costs and risk.
Adjustments in interest rates or tariff news can impact the housing market, as this can often lead to changes in demand. If you’re planning on buying, selling, or investing, here’s everything you need to know about the market:
1. Volatility leads to adjustments. When the market is volatile, you can expect adjustments in interest rates and housing values. This is due to the inherent risk that comes with market changes. Risk drives these shifts, and when the market moves in an unpredictable direction, adjustments are necessary.
“Don’t panic during market fluctuations—real estate is a long-term game.”
2. Supply and demand drive the market. Real estate is always a function of supply and demand. Even with changes in interest rates or market values, the number of available properties and the demand for them are still major factors. For example, in my local market, the inventory is higher now than it was last year, but the higher interest rates have reduced the demand for those properties. There are still plenty of transactions happening, but there’s less urgency and fewer buyers.
3. Markets will always change. The market is constantly evolving, so it’s important not to focus on short-term fluctuations. Instead, look at the long-term picture when considering real estate investments. This applies to thinking about the potential impacts of tariffs and inflation. If tariffs are causing higher costs in the economy, we could see a rise in inflation, which in turn affects the housing market.
How tariffs and inflation affect interest rates. Tariffs can increase production and consumer costs, which may contribute to inflation. In some cases, this may lead to the Federal Reserve adjusting interest rates to stabilize the economy. Periods of high inflation have historically led to shifts in interest rates, and if inflation persists, we may see rates decrease more quickly than expected.
It’s important to understand that while tariffs play a role, interest rates are also shaped by broader economic conditions. These changes in the macroeconomy directly affect the housing market and its overall performance.
The importance of long-term thinking. Real estate is a long-term investment. Short-term shifts may seem alarming, but owning property over time has proven to be a strong strategy. I’ve personally purchased properties during some of the worst market conditions, including when the market crashed and even at the start of the pandemic when everyone was scared.
Despite these challenging conditions, the market eventually changed, and I saw appreciation in my investments. Even when the market is volatile, real estate tends to go up in value over time, and rental rates for investment properties also increase.
The market is changing, but that’s no reason to pause. Real estate remains one of the most reliable ways you have to build long-term wealth. If you have questions or need guidance, just reach out. You can call me at 801-285-0521 or send me an email at Justin@JustinUdy.com. I look forward to hearing from you.
