The Federal Reserve enacted its first interest rate cut since the pandemic on September 18, 2024, slashing half a percentage point off benchmark rates—from 5.25% to 5.5% down to 4.75% to 5%
This rate cut is the Fed’s first since 2020, but it won’t be the last. On average, members of the Fed’s rate-setting committee expect borrowing costs to drop by another half-percentage point this year and an additional full point next year. That plan would reduce the key rate to about 2.9% by the end of 2026.
Here’s how the cut in interest rates is expected to affect the real estate market.
Key Takeaways
- Lower interest rates make mortgage payments more affordable, attracting buyers who were previously hesitant due to high borrowing costs, especially first-time homebuyers.
- The rate cut stimulates market activity, resulting in more transactions. This surge provides new agents ample opportunities to build their client base and gain experience quickly.
- Increased demand typically drives home values up, leading to higher potential commissions for real estate agents. Thus, it is an attractive time to enter the field.
- With favorable market conditions and growing inventory, it’s a prime moment to pursue a real estate career. Prospective agents can start earning commissions quickly after meeting licensing requirements.
How the Interest Rate Cut Will Affect the Florida Real Estate Industry
Historically, interest rate cuts have increased buyer demand, leading to more transactions and higher home values.
Lower interest rates may lead to increased buyer demand.
Buyers who were previously hesitant to enter the housing market due to high borrowing costs are expected to return following the interest rate cuts, creating a resurgence in demand.
In August 2024, the number of homes sold in Florida was down 6.1% year over year, and the national average 30-year fixed-rate mortgage rate was 6.5%.
However, the new rate range is between 4.75% and 5%, making monthly mortgage payments more manageable for buyers—especially first-time homebuyers who may have been waiting on the sidelines.
With the additional demand, home values are expected to increase.
In August 2024, the median home price in Florida was $403,000. However, as demand increases, home values often rise.
Even some of Florida’s hot housing markets are expected to increase in value.
How Interest Rate Cuts Will Affect the Real Estate Industry
Increased market activity and home prices mean it’s a good time to become a real estate agent in Florida. More volume and higher prices will lead to larger commissions for real estate agents, making it a financially attractive time to enter the field.
Additionally, this increased activity means more opportunities for new agents to gain experience and build their client base. It’s an excellent environment for learning and growing your skills quickly.
“Now is the time to start a real estate career,” said Tina Lapp, head of customer experience, instruction & operations for Colibri Real Estate. “As interest rates become more favorable and we are starting to see more inventory in most markets, we will see an increase in real estate activity. Those buyers and sellers are looking for real estate professionals to help them through the process more than ever before.”
It’s important to note that you must earn a license to become a real estate agent in Florida. Here are the steps:
- Complete a pre-licensing class
- Pass a background check
- Fill out an application
- Pass the licensing exam
You don’t need a college degree to become a real estate agent in Florida, and you can begin earning commissions as soon as you earn your license.
Start the licensing process today by enrolling in pre-licensing courses at Gold Coast Schools. Our affordable pre-licensing packages and test prep materials are expertly designed to help you earn your Florida license as fast as possible.
Discover Florida’s real estate licensing requirements and choose a pre-licensing package that meets your needs. Financing is available!