Last week, the Federal Reserve decided, for the first time in seven years, to raise interest rates above 0. The change will go into effect gradually, with rates going up by a quarter percentage point in the first year and additional, slow changes over the next three years. While it may sound like a bad thing, the news actually has positive implications for the Maryland housing market. Learn more in today’s blog.
Why are the interest rates being raised now?
The Federal Reserve has been wary of raising interest rates for so long because of the negative effect it could have on an economy that is still slowly recovering from the recession of 2008. By raising rates before they are forced to by an overheated labor market or significant inflation, the Fed should be able to have more control over the pace that rates rise. When rates are raised too quickly, it can trigger a recession which is exactly what the Fed is looking to avoid. By implementing the change slowly, the Fed will be able to more closely monitor the markets and ensure the rate hikes are not negatively impacting the economy.
How will this impact the Maryland housing market?
The housing and job markets have both been steadily improving in Maryland. Unemployment throughout the state is quite low (currently around 5%) and this places more demand on the housing market as people and families with stable jobs begin to look into purchasing their own home. As of November, the housing market has improved more than 8% over the same time in the previous year. Home prices are also rising and we’ve seen an increase of 3.2%. All indications point to the fact that 2016 will be a good year for Maryland homeowners who are looking to sell their homes.
Interested in selling your Maryland home?
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