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Why raising rates may not be bad news

Florida residents who are thinking about buying a new home may be concerned by news of a probable interest rate increase. The move by the Federal Reserve is expected as early as June, and many experts are concerned that such a hike will weaken the housing market due to higher mortgage costs.

There are several reasons why the news of a potential rate increase is not especially bad for the housing market. The market has improved significantly since the recession that began in 2008. Foreclosure rates have continued to fall, and are now at an overall rate of .07 percent across the country. Additionally, new home sales increased by 24.8 percent between February 2014 and February 2015, while the sale of existing homes rose by 4.7 percent during that period. Median sales prices increased by 7 percent to $203,000 over the figures from the same time period the previous year.

When viewing the housing market in the context of the greater economy, a rate increase also points to the fact that the rest of the economy is improving as well. According to Fannie Mae, the expected increase in disposable personal income in 2015 is 4.1 percent, while the Federal Reserve predicts unemployment to fall to 5.2 percent. Combined, these predictions make it likely that home sales will continue to rise during 2015, even with a rate increase.

The market for residential real estate has showed significant improvements since starting to bottom out in 2008. People who are in the market should not be alarmed by any potential rate hike as indicated by the Federal Reserve. As a rate increase indicates that the health of the overall economy has substantially improved, people may instead have more money at their disposal in order to afford an expected increase in mortgage payments.

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