Fed Poised To Raise Interest Rates In September

On Wednesday, July 29, 2015, the Federal Reserve (“Fed”) issued a statement hinting it will raise interest rates in the near future. The statement is in line with predictions that the Fed would raise the target interest rate before the end of the year, although the increase will come much later than many experts predicted at the beginning of the year. The increase will also likely be minimal, and will surely not meet many previous predictions of an increase to 5% by the end of the year.

The Fed’s recent statement “reaffirmed its view that the the current 0 to 1/4 percent target range for the federal funds rate remains appropriate.” However, it noted that “it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.” Given the continued moderate growth in the economy, which was also noted by the Federal Reserve, this likely forecasts the Fed’s intent to slightly increase the target interest rate in the near future.

For buyers, the news is not all bad. While an increase in the Fed’s target interest rate will increase the cost of ownership, it will also likely stall the housing market’s significant recent gains. In other words, cost of ownership will go up based on interest rates, but a slowed increase in purchase prices (or even possibly a decline in prices) of homes will likely offset that increased cost.

If you would like to further discuss how Esquire Real Estate Brokerage, Inc. can help you in the Los Angeles real estate market, feel free to give us a call at 213-973-9439 or send us an email at info@esquirereb.com.