According to a recent article, the Federal Reserve raised the interest rate by 0.75% of a percentage point, which is the biggest rate increase since 1994. The intent of this aggressive rate hike was to help fight inflation, which is currently at 8.6% as of May 2022. Mortgage rates are now at their highest level since 2008 with the average 30-year fixed mortgage rate at 5.8%.
According to the National Association of Realtors, the impact of the mortgage rate hike is that the purchasing power to buy a home has fallen by 25% and mortgage applications are down 16%.
What does this mean for the real estate marketplace? Despite the rise in mortgage rates, it is a seller’s market as there are still more buyers than available properties for sale. This means that there will still be bidding wars on homes for sale and that some buyers will waive inspections in order to make themselves appear more attractive to the seller.
A shortage of homes is projected to keep the real estate market very busy, and the need for buyers and sellers to rely on a licensed real estate agent is more prevalent than ever.
These trends have had a significant impact on the property management industry as well. With 35% of American households renting their homes and the nationwide homeownership rate continuing to drop (down 0.5%), more individuals are renting. As the market continues to grow, more real estate investors and property managers are getting into the industry and trying to figure out the best ways to conduct business properly and follow all the laws.
At the same time, discrimination claims are on the rise due to the ever evolving definition of a disability as well as what is defined as an emotional support animal. There were 30,000 fair housing complaints in 2019 and 57% (17,000) were disability discrimination complaints. The rest were sprinkled among the other protected classes.
What does this mean for the property managers marketplace? As the definition of a disability continues to change and evolve, it is important for property managers to continuously review and improve their standards and training materials. It is also important for the newer investors and property managers to fully understand the laws to ensure they are following the guidelines and not discriminating against individuals to help avoid lawsuits.
Learn more about products that serve the real estate agent and property management industries with the following point of sale marketing materials:
