COLORADO SPRINGS, Colo. (KRDO) -- As the cost of mortgage payments increases for Americans in response to the rise in national interest rates, competition is decreasing for homebuyers in the Colorado Springs housing market.
The Federal Reserve announced a 0.75% rise in interest rates on June 16, the most aggressive increase since 1994.
The Federal Reserve intends to use the raise to keep the United States from a recession. However, the increase will also impact several costs, including mortgage payments.
“The Fed came out and basically said that they're taking a hard-line stance to get inflation under control," said Tyler Eberhart, owner of Springs Realty. "So news that we told people on a Monday is different on Thursday based on things that are happening. So you have to kind of be in touch with the market."
As a real estate agent, Eberhart guides clients through the home buying process. He is no stranger to the volatility of the housing market, after witnessing the impacts of the COVID-19 pandemic and observing general market fluctuations.
Despite the changing economy, Eberhart says he sees a silver lining in the Fed's increase in interest rates.
“I mean, it definitely impacts things most specifically from a buying power perspective," said Eberhart. "Obviously, if the interest rate goes higher, everybody's buying power goes down a little bit."
Yet, in this market, Tyler says Colorado Springs homebuyers won't have to fight the same competition as they did in 2021. Last year, many homebuyers were forced to overbid to secure housing.
“If you were buying a house this time, last year, it's quite possible that you're going to have to pay 400 or $40,000 over asking,” Eberhart said.
But this summer, Eberhart says homebuyers are back to buying houses at fair value. So even though homebuyers will have to pay more for their mortgages due to the higher interest rates, they're still paying less for a home in the long run than in 2021.