Hello – thanks for stopping by. It seems that this “adjusting market” has kept me away from one of my favorite ways to stay in contact with you. I’ll talk more about the changing market later. Right now, I’d like to give my take on interest rates and how they affect the value of real estate.
The Fed lowered their rates by another .25% on Wednesday. But in actuality rates have dropped, not because of the Fed, they’ve dropped in spite of the Fed.
Ok….So, what does this mean? When the Fed cut their rates the first time in September by .50%….mortgage rates shot up by .25% in other words on that one day rates went from 6.125% to 6.375%. On Wednesday (this week) when the Fed cut rates by .25% and mortgage rates again shot up from 6.125% to 6.25%.
Every time the Fed lowers, the Stock Market buys, and the Bond Market sells. But the Bond Market is where mortgage rates come from. So when the Bond Market is buying, rates will go lower.
What drives the Bond Market? Two words….bad news. Whenever there is a lack in consumer confidence, global incidents such as 9/11 or the tsunami, jobless numbers growing, bad news in , terrorist attacks….these are all negative factors to consider and rates will drop because of this.
But the biggest key (for now) in what is keeping rates currently low….the housing and financial markets. Foreclosures and bad mortgages are the driving factor behind the fear machine of low rates……rates are continuing to drop because of the economic sector alone.
If the fed really wanted to help people with homes, they would raise their rate to 12% and watch all of the money come from over-inflated stocks (like Google), and then people would sink it into the bond market where rates would drop to 4% on a 30 year fixed.
The Triangle market is finally experiencing what the rest of the country has experienced for months – a market that is adjusting to a buyers market. Home buyers should capitalize and maximize their financial gain and potential from this natural cycle. Here is how.
When the market swings to a cycle of overbuilt. Ask two questions. First, ask what areas of Cary and North Raleigh , Apex, Wake Forest and the entire Triangle is NOT experiencing overbuilding? Yes, those areas do exist! These are areas that cannot be overbuilt by virtue of “no land” is left. Second, ask what price points are not saturated and have the fewest days on the market Even in a full blown “buyers market” there are locations ofstrong pockets & neighborhoods that do not play to the same rules as the bulk of the housing inventory. If you are truly interested in making a strong real estate purchase, there are the essential two questions you must consider. Please find an agent that can help you find the answers. Yes, I am available.
Thanks for stopping by. Hopefully, it won’t be so long till my next. Remember, now is the best time in years to buy real estate. God bless.