I’m a Real Estate Agent: 3 Ways the Fed Rate Cut Will Impact the Housing Market

The Federal Reserve’s recent half-point rate cut is going to have immediate impacts on the housing market , according to Kirsten Jordan , a licensed associate real estate broker with Douglas Elliman. The cut — which is double what the industry expected — will have both positive and negative impacts for buyers and sellers alike, she said.

Here are a few ways Jordan predicts the rate cut will affect the housing market for both buyers and sellers .

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There Will Be More Supply — and More Demand

High interest rates have kept both prospective sellers and buyers out of the market, but Jordan expects that the tide will soon turn.

“This shift creates both supply and demand,” she told GOBankingRates. “Many buyers have been sitting on the sidelines, waiting for this moment. The drop in rates means they have more spending power — it means homeownership is that much more attainable and accessible.

“For many sellers, high rates have been golden handcuffs because you can’t sell your home if you can’t afford to move somewhere else,” Jordan continued. “With rates down to the lowest point in two years, sellers now have the power to list. The market has been stuck in a chokehold of high rates and low inventory, and all of that is easing up.”

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The Market Will Become More Competitive for Buyers

Those who could afford to buy during the higher-rate environment benefited from having less competition. That will soon be changing, Jordan said.

“The market is about to get more competitive,” she said. “With so many buyers jumping back into the game, the best homes at the right price are going to see bidding wars.”

While this can be intimidating for prospective buyers, Jordan said this isn’t a reason to wait if you’re ready to buy.

“[Bidding wars] happen in any market — the most desirable properties draw the most interest,” she said. “If you fall in love with one of those homes and you can afford it, then make a counteroffer and pay above the asking price.”

However, buyers shouldn’t let sellers take advantage of this new swing in the market.

“Watch out for the sellers with bravado,” Jordan said. “Just because rates have come down doesn’t mean their home is going to sell immediately for more than it’s worth. If a seller refuses to budge, give it a couple of weeks and make another offer.”

Sellers Should Be More Optimistic — but Still Realistic

While there will be more buyers in the market, Jordan advises sellers that this doesn’t mean they can over-price their homes.

“More buyers have the ability to transact now that rates have come down, and that’s a great sign for sellers. Sellers can now be optimistic, but they shouldn’t be aspirational about pricing,” she said. “Rates are still high and buyers are unsure about paying for a home due to many factors. Price your property to sell.”

Jordan noted that sellers should still be willing to negotiate and make some concessions throughout the process.

“Sellers need to keep their cool and stay focused on their goal to sell,” she said. “Just because rates have come down doesn’t mean your home is going to be snapped up overnight for 20% over ask. Be prepared to negotiate on any offers and get ready for some last-minute negotiations before that contract gets signed.”

This article originally appeared on GOBankingRates.com : I’m a Real Estate Agent: 3 Ways the Fed Rate Cut Will Impact the Housing Market