The Federal Reserve, taking a break from its aggressive rate-cutting
policy, chose not to alter key interest rates Wednesday,
leaving the Fed Funds rate at 2.00% and everyone wondering where
interest rates are headed next.
Since last September, the Fed has cut rates seven times for a total of
3.25%. However, many experts believe that the Fed's
decision this Wednesday, along with comments from the meeting itself,
indicate an increased concern over inflation. This means
the Fed could start increasing rates as early as its next meeting,
which takes place in August.
The Fed is in a quandary. The economy has slowed, led by a decline in
home sales and rising inflation, stemming primarily from
increasing energy prices. The Fed's primary role in relation to the
economy is to combat inflation and preserve economic growth.
To combat inflation, the Fed will ultimately have to increase interest
rates in coming months.
What Does This Mean to You?
If you're looking to buy a house, consider these key
points:
- Home prices in some areas are at five-year lows, while
personal incomes in that same period have increased. Homes are more
affordable for many right now, particularly first-time home buyers.
- Sellers are extremely motivated and many buyers in our area
have benefited from the unbelievable deals that exist today.
- Experts foresee a strong rebound in home prices when the
economy begins to recover, according to a new report from the Joint
Center for Housing Studies. That means buyers today will be sitting on
valuable properties tomorrow. Remember, annualized appreciation for
homes exceeded 6.35% from 1940 to 2000.
Housing booms follow housing busts – and the savvy buyers
aren't afraid to jump into a tough market. But these savvy buyers
know that homeownership is a long-term investment. Call me to discuss
these points and get your purchase strategy on track.
Ultimately, population growth and demographics point to a stronger
housing market in coming years.
Even if you're not looking to purchase a home, opportunities still
exist. With the Fed taking a breather, this doesn't mean you
should be taking a break. It's never been more important to create a
financial plan that makes the most sense to you and your
family's long-term goals. Give The Tampa Bay Mortgage Pro a call today.
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