Buy, Sell, or Hold?

Recently, Redmond Economic Development, Inc. held its fourth community News & Brews where we highlight local manufacturers in the trade industries as well as educate our neighbors with local economic trends that affect our everyday living in Redmond.  This year, we invited experts in the lending industry to address what is happening in today’s inflationary environment including trends like:

• What is happening in the housing market?
• Should you wait for inflation to come down?
• How are the Federal Reserve’s rising interest rates affecting buying and selling behavior?
• How will Redmond’s economic growth be impacted?

Everyone has been watching what the Federal Reserve has been doing with interest rates over the past few months. REDI invited Amber Wilson, a Mortgage Lender with Umpqua Bank Home Lending, and Gary O’Connell, Market President, with Summit Bank to share their expertise in the Residential and Commercial Lending industry and to equip buyers and sellers with information on what is happening with interest rates and how it can impact consumer responses now and in the future.

With interest rates moving the market, what does that mean for lenders? In what ways are consumers responding?

We posed three questions to our experts, and they had some encouraging answers for us.

First Question: What are the top three concerns of businesses and residential buyers given the uncertain economic environment?

Our residential lending expert, Amber noted in her twenty years of experience, she has had the liveliest conversations around the timing of home purchases. She is asked most often: Do you think rates are going down? When do you think rates are going down? What if I buy or sell a home and the value decreases?

On the commercial side, Gary is observing similar reservations due to interest rates rising which erodes purchasing power to expanding a facility or buying equipment. He noted 15 years ago the yield curve is similar to current times with a curve downward. However, today he sees the curve is rising. Speculation tells us the prime lending rate will be 7.50 or 7.75% in near months ahead. He noted a common misconception is that this would be the same interest rate for both short- and long-term loans. Discussions are forthcoming to lower rates for longer term loans which can impact business decisions for what to borrow, how to borrow and when to borrow.

Next Question: Is it still a good time to buy a home or purchase a commercial building?

Gary noted slower buying activity on the business side. Companies are responding with reserves and savings going up. In the next 12-18 months, he predicts more activity in the buying market.

On the residential side, Amber told the group even with interest rates what they are, yes, it is a good time to buy. It is advantageous to buy in winter months as buyers see homes at their worst in the season. There are less buyers, which means sellers are more willing to consider reasonable lower offers. She advises not to sit on the sidelines in home buying. She tells her clients “marry the house and date the rate”. Rates will drop again, and you’ll have the opportunity to refinance.

And the Final question: What assistance programs are available to help banks provide loans to businesses and buyers?

Gary responded for the commercial industry there are a few understated resources. He mentioned there is around $85 million of federal money that is purposed for business lending. A portion of these dollars will be distributed through Business Oregon a state agency for businesses to receive financing where banks are not able to make those loans. The SBA is another lending vehicle that provides businesses loans with a lower down payment. Unlike the recession of 2008, Gary remains optimistic as he sees there are a lot of reserves, liquidity, and money out there to lend.

For residents, Amber said there are many down payment assistance programs with lenders. She is also seeing other non-occupant co-borrowers like parents and grandparents. She is seeing family living arrangements such as people living in an ADU on the property. She noted a trend of a lot of multigenerational investments to help people get into home ownership.

Being informed of ways to respond in these inflationary times certainly helped our audience ease some of the tension surrounding a slowing down in the financial realm. We believe the work REDI has accomplished to provide a diverse economy for the region will help us get through these economic headwinds. To watch the full News & Brews presentation click the News & Brews label: