MIAMI-DADE COUNTY, Fla. – The Federal Reserve’s recent half-point rate cut is sending ripples through Miami-Dade’s housing market, but experts caution that the effects will be gradual.
While the reduction aims to curb inflation and keep unemployment low, the local real estate market may not see an immediate shift.
Deanne Butchey, a finance professor at Florida International University, spoke to Local 10′s Layron Livingston about the significance of the cut, describing it as a signal of potential economic concerns.
“It means that they see additional data that’s a bit concerning, that could portend the possibility of a recession,” Butchey said.
The Fed’s decision to reduce rates from a 23-year high follows a period of rapid increases.
According to Butchey, this is likely the start of more cuts. “Rates went up too high, too fast,” she added.
For Miami-Dade residents, the cut translates into lower borrowing costs for car loans, credit cards, and mortgages.
Real estate professionals, like Carlos Villanueva, a managing broker at The Keyes Company, are optimistic that this reduction could help Miami’s housing market recover from what he describes as a “housing recession.”
He believes the lower rates could chip away at the “great lock,” a term used for homeowners reluctant to sell because they locked in mortgage rates as low as 2-3% in prior years.
Villanueva also predicted that mortgage rates, which have been in the 7% range, could eventually drop into the 5% range. He pointed out that for every one percent drop in rates, purchasing power increases by 10%, a major boost for buyers.
“That’s a big number,” he said.
Lower interest rates could stimulate home buying and selling activity, which in turn may boost consumer confidence across the Miami economy.
However, experts are cautious about expecting mortgage rates as low as those seen in the aftermath of the 2008 recession, when rates hovered between 2 to 3%.
Despite the slower pace of the changes, the rate cut marks a crucial step toward revitalizing Miami’s housing market, with potential benefits for both buyers and sellers.