Federal Reserve’s rate cuts could impact Rochester area housing market

ROCHESTER, Minn. (KTTC) – After months of anticipation, the Federal Reserve cut interest rates by half a percentage point. While it may not seem monumental, impacts will trickle down, possibly later impacting the local housing market.

With high interest rates over the past couple of months, homeowners have been hesitant to sell, but with this big move by the Federal Reserve, realtors and economists expect that to change.

The growing city of Rochester is experiencing a high demand for housing.

“We are dramatically short of where we need to be. Thousands of units we need to build in the Rochester area to keep up with demand,” RAEDI President John Wade said.

Wade says the Federal Reserve’s interest rates cut will be a good thing for homebuyers.

“If you’re looking to purchase something in the marketplace and you need to use the credit system, a drop in the interest rates is a good thing for you,” Wade explained.

Long time realtor Laurie Mangen said the market is stable but not great for buyers. She expects the cut will result in a healthy balance with sellers jumping into the market.

“The interest rates go down; the sellers are more than likely the ones that have been just sitting there. They’re probably going to jump into the market again because they’re going to have the same interest rate,” Mangen said.

With more homes on the market, prices could come down which will give buyers more bang for their buck.

“You’re not feeling like you’re strapped on the house you’re buying, but yet the sellers are oftentimes getting a good deal as well,” realtor Dane White said.

With interest rates now capped at more than 7%, experts expect rates to level out around 5% easing the anxiety for both buyers and sellers in the not-too-distant future.

“Over the next few months, we should start seeing the buyer activity start to pick up. That has been lagging over the last couple of months,” realtor Kyle Swanson explained.

Wade says the lower interest rates could also help with the production of the new construction of homes, improving the local housing supply.

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