Last Wednesday, the US Federal Reserve raised interest rates above zero for the first time in seven years. Federal officials have announced that they will raise the federal funds rate by a quarter percentage point. They have also said that they expect “gradual adjustments” in rates during the next three years. This will positively affect the Maryland 2016 housing market.
Why Is The Fed Raising Interest Rates Now?
By raising interest rates before inflation or an overheated labor market can force them to take a certain course of action, the Fed hopes to be able to move at a more controlled pace than in prior tightening cycles. In past instances, when the Fed decided to raise rates too quickly it triggered recessions. Although a slight recession can be beneficial when inflation is high, with the current low inflation rate it can be a mistake to initiate a downturn prematurely by utilizing rate hikes. Taking a more cautious approach by raising interest rates more slowly will most likely give the Fed time to understand how the economy and markets react to raised interest rates.
What Does This Mean For Maryland?
In Maryland, both the housing market and job market have been improving consistently. Mayland had an unemployment rate of 5.2 percent in November, and the most recent statistic places the state at only 5 percent unemployment. Fewer layoffs and more businesses hiring translates into an increase in growth and demand. A strong job market translates directly into a strong housing market.
Maryland’s Improved Housing Market
Household formation is gaining momentum, both in Maryland and throughout the country. According to the Maryland Association of Realtors, the number of housing units sold, under contract or pending as of November was up 8.2 percent over the course of 2014, and the median home price went up 3.2 percent. This is a direct result of an improved job market, where people with new or better jobs can afford mortgages and higher rent payments and to create their own households, even in the face of student debt hampering the housing market for many millennials.
About Colony Title Associates
Founded in 1995, Colony Title Group handles in excess of 2000 real estate closings in Washington DC and the Delmarva areas every year. The founder Tee Tillman has over 23 years of experience in the title and real estate law fields. Colony handles closings for several lenders, including banks, credit unions and mortgage brokers. Colony is the preferred choice for many real estate brokers in the Baltimore area. If you have any questions concerning what Baltimore title insurance protects you from, feel free to contact us at 410 884-1160 or visit ColonyTitle.com today!