The Federal Reserve’s recent 50 basis points (bps) interest rate cut has injected renewed optimism into the economy, particularly within the real estate sector. With more affordable investment property financing, DSCR loans, and cash-out refinance options, investors are seizing the opportunity to expand their portfolios. As another rate cut looms on the horizon, the future for real estate investing looks even brighter. Here, we explore the bull case for real estate following the rate cut, what an additional reduction could mean, and examine the top housing markets poised for growth.
Immediate Impact of the 50 bps Cut on Real Estate
The connection between real estate and interest rates is undeniable. The recent 50 bps rate cut has already sparked an uptick in real estate investment loans, fix-and-flip loans, and hard money loans, as investors move quickly to capitalize on cheaper borrowing costs. Let’s take a closer look at the effects:
• Housing Demand Surge: As interest rates drop, the cost of borrowing through rehab loans, bridge loans, and rental property loans decreases. This affordability is encouraging seasoned investors and new buyers alike to jump into the market. High-demand cities such as Austin, TX (population growth of 2.7% annually) and Raleigh, NC (population growth of 2.6%) are seeing price appreciation in their housing markets due to increased demand and limited supply. In Austin, for instance, home prices rose by 7.9% year-over-year in 2023.
• Refinancing Boom: Homeowners are capitalizing on lower interest rates to refinance their existing mortgages, leading to a surge in cash-out refinances and home equity loans. This refinancing boom is freeing up additional capital for investment and consumption. According to Black Knight, the national refinance rate increased by 47% in 2024 as homeowners sought to take advantage of lower rates, funneling liquidity into the economy and creating further opportunities for property investments.
• Increased Investor Confidence: Reduced borrowing costs have fueled confidence among real estate investors. Financing options such as DSCR loans, investment property financing, and rental property loans are now more attractive than ever. Investors are pursuing ambitious projects, including commercial and residential properties, in fast-growing markets like Phoenix, AZ, which experienced a 5.3% home price increase in 2023, and Miami, FL, where home prices grew by 8.7%. The surge in demand for fix-and-flip projects in markets like Tampa, FL, which saw a 6.2% price increase, further highlights the growing investor activity.
The Bull Case Strengthens: Top Markets Poised for Real Estate Growth
Analysts predict that another 50 bps rate cut may be on the horizon. This would prolong the period of low borrowing costs, creating an extended opportunity for real estate investors to secure favorable financing. Here are some of the fastest-growing cities and housing markets that stand to benefit:
• Austin, TX: The population in Austin has grown by 2.7% annually over the past five years, making it one of the fastest-growing cities in the U.S. In 2023, home prices in Austin increased by 7.9%, and they are expected to rise further as demand outpaces supply. The city’s booming tech sector, combined with a strong local economy, positions Austin as one of the most promising markets for real estate investors.
• Raleigh, NC: Raleigh’s strong economy and rapid population growth (2.6% annually) have made it a top destination for investors seeking both rental property loans and investment property financing. Home prices rose by 8.1% in 2023, and with ongoing job growth in technology and healthcare sectors, demand for housing is expected to keep climbing.
• Phoenix, AZ: Phoenix is another hot market, with home prices increasing by 5.3% year-over-year in 2023. Phoenix’s population grew by 2.2% over the same period, driven by the city’s appeal to remote workers and retirees. This market is ripe for fix-and-flip loans, bridge loans, and rental property investments.
• Miami, FL: Miami has become a focal point for both residential and commercial real estate investments. Home prices increased by 8.7% in 2023, driven by an influx of new residents and strong demand from both domestic and international investors. Hard money loans and private money loans are in high demand here, as developers and flippers aim to capitalize on Miami’s thriving real estate market.
• Tampa, FL: In Tampa, home prices grew by 6.2% in 2023, and the market continues to attract investors seeking rental property financing and cash-out refinance opportunities. Tampa’s economic growth and population increase (1.9% annually) make it one of the top markets for real estate investment in the Southeast.
Additional Market Drivers: Why Real Estate is Primed for Long-Term Growth
While the macroeconomic environment is already encouraging investment, several factors suggest the real estate market is positioned for sustained growth:
• Another Potential 50 bps Rate Cut: With inflation continuing to cool, many expect the Federal Reserve to enact another rate cut in the coming months. This would reduce borrowing costs even further, making DSCR loans, fix-and-flip loans, and rental property loans even more accessible. For investors looking to expand their rental portfolios or pursue larger investment property projects, this could be a pivotal moment.
• Declining Inflation & Job Market Stability: Inflation is gradually declining while the job market remains strong. The U.S. unemployment rate stood at 3.8% in August 2024, reflecting a robust labor market that supports steady income growth. This creates favorable conditions for real estate investing, as consumers feel more confident about making long-term investments in both primary residences and investment properties.
• Supply Constraints Driving Appreciation: The real estate market’s growth is further supported by supply constraints in key markets. In many cities, housing supply has not kept pace with demand due to zoning restrictions, labor shortages, and rising material costs. As a result, property values in markets like Dallas, TX, where home prices increased by 6.5% in 2023, are expected to continue appreciating. Investors who lock in favorable investment loans now could see significant returns as prices rise.
Looking Ahead: What Investors Should Do Now
With another 50 bps cut likely, now is an ideal time for investors to act. Locking in low interest rates for fix-and-flip loans, rental property financing, or cash-out refinances could help investors maximize returns while minimizing borrowing costs. As demand for housing continues to surge and inflation moderates, the real estate market is positioned for strong performance through 2025 and beyond.
For those considering entry into the market, expanding their rental property portfolios, or pursuing larger investment property projects, now is the time to act. The combination of low borrowing costs, strong housing demand, and supply constraints provides the perfect environment for real estate investments to thrive.
Staying Ahead of Rate Changes: Funded Capital’s Commitment to Investors
At Funded Capital, we pride ourselves on staying ahead of the curve when it comes to interest rate changes. Our mission is to ensure that our clients always have access to the most competitive rates in the market, helping them achieve their real estate investment goals with greater ease. We closely track shifts in economic conditions and adapt our rates accordingly, putting us at the forefront of the industry. Every time there’s an opportunity to lower rates, we take it, ensuring that you benefit from cost-effective financing without sacrificing quality service or support.
In recent months, we’ve made significant rate cuts that have created even more value for our clients. For example, we’ve lowered rates for our popular fix-and-flip loans, making it easier for investors to maximize their profits while keeping expenses manageable. We understand that lower borrowing costs directly impact your bottom line, so we’re constantly refining our offerings to provide you with the most advantageous rates possible.
Competitive Loan Offerings: Fix and Flip, DSCR, and More
One of our most recent changes has been to our DSCR loan rates, which now start as low as 5.7%. This positions us as one of the leaders in investment property financing, offering an unbeatable solution for rental property investors. Whether you’re growing a rental portfolio or taking on a new construction project, these rates are designed to enhance your cash flow and support your long-term financial growth.
Additionally, our fix-and-flip loans have become even more appealing with reduced interest rates. These loans offer up to 90% financing on purchase price and 100% of rehab costs, giving you the leverage you need to complete projects swiftly and profitably. The combination of our reduced rates and flexible terms makes these loans a smart choice for investors seeking to optimize their returns.
By consistently cutting rates and improving our loan programs, we’re positioning Funded Capital as your go-to partner for real estate investment success. Whether you’re looking for a fix-and-flip loan, DSCR rental financing, new construction loans, cash-out refinancing, or rental portfolio financing, our rate adjustments ensure that you’re always getting the best deal on the market. Let us help you grow your real estate portfolio with confidence, knowing that we’re always working to give you the most competitive financing options available.
Conclusion
The bull case for real estate remains robust in the wake of the Federal Reserve’s 50 bps rate cut. Lower interest rates have boosted affordability, driving demand and supporting price growth in key markets. As inflation continues to cool and another rate cut appears imminent, real estate stands out as a promising investment sector. Whether you’re an experienced investor or a first-time buyer, the next few years could offer unprecedented opportunities in the real estate market.
At Funded Capital, we’re dedicated to ensuring that you capitalize on these opportunities. By staying ahead of rate changes and cutting rates whenever possible, we provide our clients with some of the most competitive financing options available. Our recent reductions in fix-and-flip loan rates and DSCR rates—starting as low as 5.7%—underscore our commitment to supporting real estate investors with cost-effective solutions.
Whether you’re looking to flip properties, build rental portfolios, or refinance existing investments, Funded Capital offers a range of loans tailored to your needs. Our proactive approach to rate adjustments, combined with flexible financing terms, ensures that you’re positioned for success. As the real estate market continues to grow and evolve, we’re here to provide the strategic lending solutions that help you thrive in this dynamic sector. Now is the time to take advantage of historically low rates and partner with Funded Capital to achieve your real estate investment goals.
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