At our blog, we had the privilege of interviewing Fisher Investments’ founder, Ken Fisher, about the impact of interest rates on real estate. Ken shared his decades of expertise in the finance industry to help us better understand the relationship between these two important economic factors. In this post, we will provide you with an overview of our conversation and some key takeaways you can use to inform your investment decisions. Join us as we delve deeper into this fascinating topic with Ken Fisher.
Introduction:
Real estate markets can be influenced by a wide range of factors that impact supply and demand. One of the most significant factors is interest rates. Ken Fisher, the founder and chairman of Fisher Investments, sheds light on how interest rate changes in the US can impact the real estate market.
Interest Rates and Real Estate:
The effects of interest rates on real estate markets are complex and multifaceted. Short-term interest rates have been on the rise for some time. This can lead to an increase in the cost of borrowing, which can reduce demand for real estate. However, long-term interest rates, which have a greater influence on real estate activity, have fallen since October 2022. This has led to an increase in demand for real estate as borrowing has become more affordable.
Other Factors Affecting Real Estate Supply and Demand:
Interest rates are just one of many factors that impact real estate markets. The health of the economy, job growth, and population demographics also play a vital role in determining real estate supply and demand. For example, single-family home prices have remained robust because homeowners locked in low mortgage rates are reluctant to sell, which limits supply. In contrast, work-from-home policies have reduced demand for city center office buildings, but demand for multi-family residential properties, the most significant component of commercial real estate, is strong.
Interest Rates and Market Sentiment:
Interest rate changes can influence market sentiment, but other supply and demand factors have a more significant influence on real estate markets. However, the impact of interest rates on the stock and bond markets can indirectly impact real estate markets. For example, if investors shift their focus from real estate to other investments like stocks and bonds, real estate prices may temporarily decline.
Investing in Real Estate:
Real estate investing can offer significant opportunities for long-term growth and income, but it’s important to recognize that it comes with risks. Investing in securities also involves risk, and foreign stock markets entail additional risks like currency fluctuations. It’s crucial to seek personalized investment advice before making any investment decisions.
Conclusion:
Interest rates have a complex and multifaceted impact on real estate markets. While they play an essential role in determining real estate supply and demand, other factors like the health of the economy and population demographics are also crucial determinants. It’s important to carefully consider these factors and seek personalized investment advice before investing in real estate or securities. The views expressed in this content are Fisher Investments’ general views and not personalized investment advice, and they are subject to change without notice.
