By Shelley Sakala

By now, we’ve all heard about Silicon Valley Bank’s collapse. The question is, what (if any) impact will it have on the real estate market? SVB’s failure means the Federal Reserve can’t be as aggressive in raising short-term interest rates, so the result will be a decline in mortgage rates. Lower mortgage rates mean that homebuyers can potentially afford more expensive properties or lower their monthly mortgage payments, which could increase demand for homes. Home buyers have been facing affordability issues as mortgage rates are nearly double what they were just a year ago.

However, the uncertainty caused by the bank’s failure may also make buyers more cautious, leading to a decrease in demand. Also, if more banks were to collapse, it could lead to tighter lending standards and fewer financing options for homebuyers, which could further impact the real estate market. So, it will be interesting to see how the situation evolves and how it may affect our North Phoenix real estate market in the coming months.

News headlines have also affected the real estate market. Both Goldman Sachs and Bloomberg have revised their predictions for this month’s interest rate hike. Goldman Sachs had previously projected a 0.25% increase in interest rates for this month. Now, following SVB’s collapse, they no longer expect a rate hike. This is because the market uncertainty caused by the bank failure has led them to believe that the Federal Reserve may be hesitant to raise interest rates.

On the other hand, Bloomberg analysts disagree with Goldman Sachs’ take. They say the Federal Reserve will stick with the predicted 0.25% increase in interest rates for this month. According to them, the strong jobs report indicates that the economy is performing well, and the Fed may be more focused on controlling inflation than on addressing market volatility. The disagreement between Goldman Sachs and Bloomberg highlights the uncertainty surrounding the financial industry following SVB’s collapse. It is difficult to predict how the Federal Reserve will respond to the situation, and this has led to differing opinions among analysts. While the future remains uncertain, it is clear the financial industry will need to take steps to address the issues raised by this development of SVB.

 

Shelley Sakala is a local realtor and owner of The Sakala Group Real Estate.