Noble Black, Douglas Elliman’s leading agent with over $3 billion in sales, expects the Federal Reserve’s rate cut to energize the real estate market.
Speaking on CNBC’s Power Lunch last week, Black noted that buyers are already responding to lower interest rates.
“We’re seeing increased activity, particularly in hot markets,” Black said. He pointed to a surge in signed contracts this summer, with Manhattan up 30% and Brooklyn 50% compared to last year.
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While cash deals have dominated the market for the past 18 months, Black said he is seeing a gradual shift. “You’re starting to see people start tiptoeing back into financing,” he said, predicting that even those able to pay cash might opt for mortgages as rates decrease.
The 0.50% rate cut the Fed enacted last week raises questions about housing affordability. Black acknowledged that lower rates could initially drive prices up due to increased demand. However, he said there are long-term benefits.
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“Lower rates are going to mean that more people are going to build houses, more builders get back in and, I mean, we have a housing crisis in the sense that nationally there’s not enough [inventory]. We need people building more houses, we need it to be easier for them to build more houses.”
For potential buyers, Black advised against waiting. “Long term I think this is the right direction, but short term if buyers are sitting waiting, it’s the wrong move,” he said, warning that delaying could lead to higher prices and reduced affordability, even with lower interest rates.
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Black also addressed the broader issue of housing supply. He called for the next Presidential administration to reduce “red tape” (regulations) on builders, describing the current regulatory environment as an “unnecessary layer” that is hindering construction.
“You know I really think the biggest thing is red tape. What [builders] have to go through and the hurdles that they have to go through to build. All of the regulations and the different things you have to satisfy, whether it’s state or national level – there are so many impediments.”
He continued, “They almost add a different layer or an additional unnecessary layer on top of that. They say you want more housing but in some sense they make it very hard for the builders to build.”
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If elected in November, Vice President Kamala Harris has promised to build three million housing units over the next four years. Harris has also proposed new tax breaks for first-time buyers.
Meanwhile, while former President Donald Trump hasn’t said much about how he’d handle housing affordability, the GOP says it will reduce mortgage rates by defeating inflation. It also said that it would allow new home construction on some portion of Federal land.
As the market anticipates the Fed’s moves (which include two additional rate cuts before the year ends), Black provides insights to the real estate industry. Potential changes in financing, pricing and construction on the horizon may reshape the landscape for buyers, sellers and builders in the coming months.
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This article Douglas Elliman’s Top Agent With $3B Record Sales Speaks on Fed Cut’s Effect On Market Rate As ‘People Start Tiptoeing Back Into Financing’ originally appeared on Benzinga.com
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