Should You Wait On Interest Rates To Buy Or Sell A Minneapolis Duplex?

With encouraging news about inflation, a stock market that believes interest rates will start to drop in June, and Federal Reserve Chair Jerome Powell’s promise of three rate cuts this year, it may be tempting to wait to buy or sell a Minneapolis duplex, triplex or fourplex.

There are some flaws in that logic, however.

First, historically the Federal Reserve is quite measured on rate reductions unless something catastrophic happens on a large scale. Think .25% of a point per meeting, or every other meeting. Most substantive rate changes take 18 months or more.

Will a rate reduction of a quarter point inspire packs of buyers to jump into the real estate market? Or will the public believe more rate cuts will follow and hold off for something below 4%; which may not be for years or even decades in the future?

If you’re a duplex buyer, will there be more or less competition for the limited supply of small multifamily properties on the market? Lower interest rates bring out more buyers, and when demand exceeds supply, especially when the cost of borrowing money is lower, prices always go up. Perhaps it’s better to buy at a lower price now and refinance later.

On the other hand, if you currently own a Minneapolis or St Paul duplex and you’re thinking you’ll wait until rates go down, you have to ask yourself whether you can be certain when that will happen, and that nothing economically disruptive will happen between now and that far off date.

Like stocks, it’s tough to time the real estate market.  That’s why the best time to buy or sell is now. None of us knows what the future may bring.