Don't let your mortgage tie you down.

Don't let your mortgage tie you down. 

Together we can find a home where you can truly relax and live your dream. 

Reach out today to start your journey!

PATTI LEE PROPERTIES
Results that Move You!

Veteran advisor explains what interest rate cut means for retired people

 

The Federal Reserve’s surprising 0.5% cut to the federal funds rate will have trickle-down effects on consumer lending and the stock, labor, and housing markets.

While lower interest rates aim to increase consumer confidence, spending, and business growth, some financial products may also be impacted. However, conservative low-risk investments preferred by retirees, such as Certificates of Deposit (CDs) and annuities, may see lower returns.

We spoke with Bob Powell, CFP and editor of Retirement Daily, to unpack what retirees can expect from this rate cut and future rate cuts through 2025. Lower rates may prompt some retirees to reexamine their investment portfolios.

Retirees should focus on investments with returns above inflation rates

Retirees tend to have risk-averse investment portfolios, as most have passed the “accumulation” phase of their lives and are more focused on maintaining their savings and offsetting inflation risk.

Powell suggests that retirees focus on money market funds and CDs to accrue interest in a less risky way.

More on retirement:

• The average American faces one major 401(k) retirement dilemma
• How your mortgage is key to early retirement
• A few simple tasks can help you thrive in retirement

“I think one thing that retirees might consider doing is investing in a way that allows them to take advantage of the existing higher interest rates that may be around,” he said. “So you could invest maybe in a money market fund and earn 4%, which is above the inflation rate.”

“In fact, it's one percentage point above inflation at the moment,” he explained. “So that puts more money in your pocket any time you can earn a nominal rate of return that's higher than the current inflation rate, you get a real rate of return that's positive.”

CD ladders can help offset inflation

A CD ladder allows retirees to open multiple products with different maturity dates, giving access to different portions of their money.

“Think about investing in those instruments like money market funds or consider laddering CDs,” Powell said.

“At the moment, you might be able to ladder 1 to 5-year CDs that offer higher rates than what inflation is at the moment, and then that can also put real money back in your pockets, too,” he explained.

Retirees can reap the benefits of getting higher interest rates in the short term while having investments secured that can withstand inflation and market volatility. CD ladders typically allow retirees to earn more across multiple products than if they were to put all of their savings in one long-term CD.

“Those two things should go a long way toward helping retirees invest in a way that — ultimately one of the goals of investing in retirement, or even in your pre-retirement years — is to outpace inflation.”

PATTI LEE PROPERTIES
Results that Move You!

“A drop in the cost of borrowing will help fuel more homebuyer demand . . . Falling rates will also bring more sellers into the market.”

If you’ve been hesitant to list your house because you’re worried no one’s buying, here’s your sign it may be time to talk with an agent.

After months of high rates keeping buyers on the sidelines, things are starting to shift. Rates are already coming down due to a number of economic factors. And yesterday the Federal Reserve cut the Federal Funds Rate for the first time since they began raising that rate in March 2022. And while they don’t control mortgage rates, this sets the stage for mortgage rates to fall even further than they already have – especially since more cuts from the Fed are expected into next year. And lower mortgage rates are bringing more buyers back into the market. Lisa Sturtevant, Chief Economist at Bright MLS, says:

“A drop in the cost of borrowing will help fuel more homebuyer demand . . . Falling rates will also bring more sellers into the market.”

The best part? You can take advantage of that renewed buyer interest.

As Rates Fall, Buyer Activity Goes Up

The graph below illustrates the relationship between falling mortgage rates and rising buyer activity. The orange line represents the average 30-year fixed mortgage rate, while the blue line shows the Mortgage Bankers Association (MBA) Mortgage Application Index, which tracks the number of mortgage applications.

As you can see, as mortgage rates (orange) come down, the Mortgage Application Index (blue) rises, showing more people start to re-engage in the process (see graph below):

What This Means for You

According to the National Association of Realtors (NAR), home sales increased in July, which was a welcome shift after four straight months of declines. If you’re a homeowner thinking about selling, this uptick in buyer activity works in your favor.

More buyers means more competition, which can lead to higher offers and shorter time on the market for your house. And, according to Edward Seiler, AVP of Housing Economics at the Mortgage Bankers Association (MBA), this trend is expected to continue:

“MBA is expecting that slower home-price appreciation, coupled with lower rates, will ease affordability constraints and lead to increased activity in the housing market.”

All in all, the market is becoming more accessible to a wider range of buyers, which could result in even more people looking to purchase a house like yours.

With more buyers entering the market, now’s the time to start getting your house ready to sell.

Bottom Line

The recent decline in mortgage rates is already driving more buyers into the market, and experts project this trend will continue. Work with a local real estate agent to take advantage of this increased buyer demand and get your house ready to sell.

PATTI LEE PROPERTIES
Results that Move You!

Is Your House Priced Too High? PATTI LEE PROPERTIES TEXAS REALTOR WISE COUNTY

Every seller wants to get their house sold quickly, for as much money as they can, with as few headaches as possible. And chances are, you’re no different.

But did you know one of the biggest things that could jeopardize your success is the asking price for your home? Pricing your house correctly is one of the most crucial steps in the selling process.

So, how do you know if you’re missing the mark? Here are four signs your high asking price might be turning potential buyers away—and why leaning on your real estate agent is the best way to course correct.

1. You’re Not Getting Many Showings or Offers

One of the most obvious signs your house may be overpriced is a lack of showings. If it’s been on the market for several weeks and only a few buyers have come to see it—or worse, you haven’t gotten any offers—it could be a clear indication the price isn’t matching up with what buyers expect. Because buyers who have been looking for a while can easily spot (and write off) a home that seems overpriced.

Your real estate agent will coach you through this, so lean on their experience for what you may want to try to bring more buyers in, including considering a price cut.

2. Buyers Have Consistent Negative Feedback after Showings

And if after the showings you do have, comments from the potential buyers aren’t great, you may need to course correct. Feedback from showings is an important part of understanding how buyers see your house. If they consistently say it’s overpriced compared to other homes they’ve seen, it’s time to reconsider your pricing strategy.

Your agent will gather and analyze this feedback for you, so you can look at how your house stacks up in the market. They can also suggest specific improvements or staging changes to better justify your asking price, or recommend one that aligns with today’s buyer expectations. As the National Association of Realtors (NAR) explains:

“Based on all the data gathered, agents may make adjustments to the initial price recommendation. This could involve adjusting for market conditions, property uniqueness, or other factors that may impact the property’s value.”

3. It’s Been on the Market for Too Long

And that lack of interest is ultimately going to lead to it sitting on the market without any serious bites. The longer it lingers, the more likely it is to raise red flags for buyers, who may wonder if something is wrong with it. Especially in today’s market with growing inventory, a long listing period means your house is stale – and that makes it even harder to sell.

Your real estate agent will be able to give you perspective on how quickly other homes in your area are selling and walk you through what’s working for other sellers. That way you can decide together if there’s something you want to do differently. As a Bankrate article says:

“Check with your agent about the average number of days homes spend on the market in your area. If your listing has been up significantly longer than average, that may be a sign to reduce the price.”

4. Your Neighbor’s House Sold Without an Issue

And here’s the last one to watch out for. If similar homes in your area are selling faster than yours, it’s a clear sign that something is off. This could be due to things like a lack of upgrades, outdated features, or a less desirable location. Or, it may be priced too high.

Your agent will keep you up to date on your competition and what changes, if any, you need to make your home more competitive. They’ll offer advice on small updates that could increase your home’s appeal or how to adjust your strategy to reflect the reality of the market today.

Bottom Line

Pricing a home correctly is both an art and a science. It requires a deep understanding of the market and buyer psychology. And when the price isn’t drawing in buyers, there’s no better resource than your agent on what you may want to do next. Let's talk. Contact us today!

PATTI LEE PROPERTIES
Results that Move You!