Interest rates have a huge impact on housing demand and prices. So, today I’m gonna talk about the increase of interest rates and what it means for you as a real estate investor.
On Dec. 10, 2021, the Bureau of Labor Statistics stated that the U.S. inflation rate increased 6.8% over the previous year, the largest year-over-year rise since 1982.
Now, I know that could seem terrifying for you as a real estate investor. But I’m telling you right now, don’t let the Fed raising interest rates scare you out of doing deals.
The biggest winners with interest rates going up would be the investors that bought the real estate.
You see, if you go back to the 20th century, people used to pay much higher interest rates on average than they have over the last 20 years.
In the early 80s, people were paying 17.5% interest. And that was for home mortgages — the cheapest way that you can possibly borrow money.
So, it just goes to show that even though they’re rising, they’re still not gonna get anywhere near what they were 40, 50 years ago. That means you shouldn’t worry too much about them.
Focus more on where the economy at large is headed because that’s really what’s gonna drive rents and home prices.
The Fed didn’t raise interest rates until they knew that the economy could take it. That’s a sign of confidence in the U.S. economy.
Long story short, don’t freak out. And don’t expect interest rates to go back to 20th-century levels, either. Those days are over.
Real estate is still a great place to protect your capital, to get appreciation, to get big tax write-offs, and to take advantage of inflation. For more industry insights you need as an investor, hop on my free real estate training webinar.