Whether you're planning to buy, sell, downsize, or tap into your home equity, the latest interest rate cuts are signaling 'go time' for the housing market. Tune in to learn why now is the time to take action and how you can maximize your opportunities before competition heats up in 2025. Don’t miss this chance to secure your dream retirement move!
In this episode of Next Act Ninjas, host Rachael Van Pelt breaks down the latest Federal Reserve interest rate cut and what it means for your retirement and real estate goals. Whether you're planning to buy, sell, downsize, or tap into your home equity, these rate cuts are signaling "go time" for the housing market. Tune in to learn why now is the time to take action and how you can maximize your opportunities before competition heats up in 2025. Don’t miss this chance to secure your dream retirement move!
Chapters
00:00 Federal Reserve Interest Rate Cuts
01:54 Why the Housing Market is Going to Heat Up
03:37 Rates Matter Even if You are Downsizing
05:32 Selling in a Competitive Market
06:18 Tapping into Home Equity
07:28 Start Preparing: Don't Sit on the Sidelines
10:07 Interest Rate Cuts mean Go Time
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Welcome back to Next Act Ninjas, the number one podcast for mastering your health and wealth longevity. I'm your host, Rachael Van Pelt, retired healthspan scientist turned Realtor and coach. I'm so happy you're here with me today because I want to talk to you about something that's going to affect a lot of you who are thinking about that dream retirement move in the next two years. The Federal Reserve just cut interest rates by 50 basis points last week.
That's the first rate cut since the pandemic in 2020. And analysts are expecting we might see another 50 basis point cut by the end of 2024. Now I know what some of you might be thinking. "Interest rates? bah humbug"! "How does that affect me"? Well, buckle up because it's going to have a huge impact whether you're buying, you're selling, or you're thinking about pulling equity out of your home in the next couple of years. The market is about to heat up and it's going to heat up fast. Why? Well, let's break it down.
First and foremost, the basics. A 50 basis point cut just means federal reserves lowered interest rates by half a percent. When the Fed cuts interest rates, it's basically lowering the cost of borrowing money. This is good news if you're thinking about buying a home because your mortgage will likely be cheaper. That translates into serious savings if you're financing a home purchase. Think about that for a moment. If you're taking out a $500,000 mortgage with a 30-year-fixed-rate loan, that half a percent cut could save you about $2,000 per year or $60,000 over the life of the loan. Just think what you could do with that extra money in your pocket when you step into retirement or you're thinking about that next big adventure.
But here's the kicker, these lower interest rates aren't just for you, they're for EVERYBODY looking to buy. So what happens when more people can afford homes? Well, demand for property goes up, doesn't it? But here's where things get really interesting, especially if you're thinking about downsizing or relocating or investing in real estate. These cuts and the ones coming down the pipeline, they're setting the stage for what I'm calling a "perfect storm" in the housing market.
By the spring of 2025, I expect the competition for homes, especially the really good homes in desirable areas, to be fierce. The market is going to heat up fast. Because when borrowing costs go down, more buyers jump into the market. Many people have been sitting on the sidelines. And many of those buyers are younger, in their 30s and 40s, and they're looking to upgrade, or they're looking to invest. They're not wanting to sit back and wait. They're ready to buy now.
For my 55+ listeners, here's why this matters. You might be thinking about a home that better fits your retirement lifestyle, a second home in a vacation spot, or maybe even an investment property to help fund that next chapter of life. The cost of securing that property is going down, but only for a short while. Because what happens when demand goes up, well, prices go up, don't they? Especially if the supply of new homes does not keep up with that demand, which it usually doesn't, does it? There's usually a lag while new construction catches up. So there's going to be a window of opportunity, but it's not going to be open long, so you don't want to miss it.
Now, I know some of you listening might be thinking, "Rachael, I'm downsizing. I don't need a mortgage for my next home". If that's you, you might be thinking that the interest rate cuts don't affect you, but here's the thing. Even if you're not borrowing money to buy your downsize, the rate cuts will absolutely affect the market for your existing home when it's time to sell that. More buyers can now afford to purchase homes, and that means increased demand for properties like yours, especially if you're in a sought after location or you have one of those home that checks all the boxes for today's buyers. It's great news if you're selling.
But here's the catch, you don't want to wait until every other seller in your neighborhood is putting their home on the market. My neighborhood here in Colorado has already been heating up in the past week. But I'm also seeing a lot of people in our age group waiting, waiting for the perfect time to buy or sell, waiting to get through the election season or the holidays or whatever. Well, there's no better time than when the Federal Reserve cuts interest rates. That's as much of a green light as you're going to get.
And we're not going back to the 3% rates again anytime soon. So there's no benefit to waiting longer. In fact, waiting might actually cost you. If you're planning to buy a home in the next two to three years, right now is probably your best window of opportunity because by 2025, we're likely to see a flood of buyers rushing into the market thanks to the lower interest rates. That means more competition for the home you want and probably higher prices too. Are you prepared for that? Are you prepared for bidding wars? Because I think by spring of 2025, that's exactly the situation you could find yourself in, competing against other buyers who are just as eager to snap up that perfect property.
Now, if you're thinking, "ooh, bidding wars, that'll be a great time to sell", you'd be right. But only if you have a house that is highly desirable and can out-compete all the other people who decide to sell at that time. If that's the case, and you don't need to sell your home first to buy that next property, you could be in a great position. You could buy by the end of 2024 and sell later in the spring of 2025. Maybe even use a bridge loan to help you do that. But again, I'd be careful taking this approach because you don't want to be selling at the same time as all your neighbors. Ideally, you want to be a little ahead of the frenzy when supply hasn't quite caught up back with demand and everybody's competing.
Let's shift gears for a moment. Maybe you're not even thinking about buying or selling right now. Maybe you're sitting in your home and you're looking at all the equity you've built up over the years and you're wondering if now might be a good time to tap into that equity. The answer is yes. The interest rates have something for you too. For those of you considering refinancing to pull equity out of your home, those lower interest rates are great news. With a refi, you have the option to pull out some of that equity in the form of cash, and that cash you can use for anything, from home improvements to funding your next investment.
Or maybe you're considering taking out a reverse mortgage instead. A reverse mortgage will allow you to tap into the equity in your home without needing to make monthly payments, something that can be very attractive if you're over the age of 62 and you want to free up some cash flow. Lower interest rates could mean you qualify for more funds with that reverse mortgage because the amount of money you can receive is usually tied to those interest rates. The lower the rate, the more equity you may be able to access.
But here's the key takeaway. Whether you're refinancing or you're pulling equity or you're exploring a reverse mortgage, timing matters. Lower interest rates mean better opportunities. But just like in the housing market, you don't want to wait too long and miss out on the best terms. Whatever you do, don't sit on the sidelines. If you've been thinking about buying or selling or investing in real estate, start taking action now.
Now, if you're thinking, Rachael, I'm not ready for this, not ready for a big move. I get it. It's a huge decision, especially when you're planning for retirement or a major life change. But here's the truth, preparation is power. The first step is simply to strategize with a real estate professional who understands market timing. Someone like me who can guide you through the process of making your next move. There's a lot of steps that can feel overwhelming at times, but the first thing I always do for people is help them focus and prioritize.
For some of you, the first step will be talking to a lender, even if you're not sure you're going to buy right away. Just understanding your financing options is a powerful move. I can connect you with one of my preferred lenders if that's the case. It will put you in a position to act when the right home comes along or you want to tap into that home equity.
If you're thinking about selling, start preparing your home for the market right now. This is especially important if you haven't moved in a while. While you're looking to downsize, now is the time to declutter. Get rid of stuff so that you can move into that smaller home. And as demand increases, the best prepared homes are going to sell faster and for a higher price. So make sure your home is ready to compete with other listings. There's a lot of little things that you can do to improve curb appeal and spruce things up inside, but it does take some forethought. Start the decluttering process right now. You don't want to wait until last minute.
The key here is not to wait until 2025 to start your journey. More sellers will be entering the market in spring of 2025. They're going to be drawn by the favorable selling conditions and the seasonality of the market. That's why you want to act before the market gets flooded. Selling in a less competitive market means you can get top dollar for your home while buyers are still hungry, right? And inventory is still limited.
So what's the big takeaway here? The Fed cutting interest rates is a big deal, and it's setting the stage for major changes in the housing market over the next six to 12 months. Rates are low right now, and they may go even lower by the end of the year. But by 2025, the housing market could be a completely different landscape with far more competition for the homes you're interested in.
If you're planning to buy or sell or invest in real estate, or even if you're just considering refinancing or pulling equity out. Don't wait for 2025 to roll around and find yourself in the middle of a bidding war or locked into less favorable terms. Start taking steps now to secure your future.
And as always, if you need guidance, whether it's buying or selling or just figuring out your next steps, reach out to me using the link in the show notes below. I'm here to help you navigate these changes so you can thrive in your Next Act. Until next time, live well, love more, age less, my friends.