Mortgage Interest Rates Are Too LOW
Karen Your posts have improved regularly over the nearly three years you have been posting on Active Rain. I am proud to participate with you. Your posts cover local events, market reports and historical sites
THAT IS NOT A TYPO!!!!
In the 34 years my husband and I have been in the real estate business we have never seen interest rates as low as this week's 4.36%.
Although we sold homes when interest rates reached 17% the average over our business career has ranged from 8 - 10%. If low interest rates are vital to real estate recovery why were resales down 27% nationally in July with new home sales down 12%?
If I put myself in the place of the consumer I thinkI, the purchaser, don't need to be an economist to know the timing may not be right to forge ahead with a home purchase in view of the two considerations above. Rather, patience may be my wisest financial option.
- Why should I buy now - interest rates keep going down weekly
- Why should I buy now - housing prices continue to drop
THE SOLUTION
Historically, in the real estate business one of two factors have caused purchasers to move forwardAnybody who doesn't believe that hasn't had much experience as a REALTOR®
- Increasing interest rates
- Increasing prices
If the Federal Reserve took action that caused mortgage rates to increase by .0625 to .125 every two weeks buyers would come back in the market and it would begin to correct itself. It would be evident to them that now is the time to buy.
Frankly, I don't believe that this is the time to tell clients now is the time to buy - it goes in one ear and out the other. They are well aware it is a self serving statement. People are just plain scared about the future - they see nothing positive in the economic news and have come to realize government tax credits are like excursion tickets - "good for one day only". The time to advise them to buy is when interest rates and prices begin to rise, not when they are declining.
I'm confident there are those who will criticize me for pessism. Unlike Joe Biden I am not of the opinion we are going in the right direction with 14 million Americans unemployed and gross domestic product declining over the last nine months". As always housing is the engine that will pull us out of recession if we do it the smart way.
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