What Does the Debt Ceiling Debate on Capitol Hill Have To Do With the Real Estate Market?

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Real Estate Agent with Long and Foster REALTORS®, Gainesville, VA VA License # 0225089470

What Does the Debt Ceiling Debate on Capitol Hill Have To Do With the Real Estate Market?

Quite frankly, I'm tired of listening to the news of the debt ceiling and what is going to happen if we don't raise it and if we do, but only temporarily.  Word is getting out now that,as a result of our elected officials being unable to compromise and remaining stuck in their ideological muck, that the United States is becoming more likely to default on it's debt obligations.  It doesn't mean we will...just that we are MORE LIKELY to default.  How we continue to elect politicians that do NOTHING for the BETTERMENT of our Country is beyond me?

So what will likely happen, is that our AAA credit rating as a Country is going to be downgraded.  This shouldn't shock anyone.  Our Country, if it were a person, would have declared bankruptcy by now.  We spend more than we bring in.  It can't continue.  And it seems that Greece is the story we are following in the foot steps of.  Did you know consumer interest rates in Greece have reached 17% since their debt crisis?

So what does all this mean to the real estate market?  To Buyers and Sellers out there?

When the United States' credit rating is downgraded, the cost of our credit goes up.  And that means mortgage interest rates will rise.  Credit card interest rates will rise. 

If you have been sitting on the fence waiting for a "sign" to tell you it's time to buy, that smoke coming from Capitol Hill is your signal.  No matter how they solve the short term debt ceiling problem, to our creditors, our Country is becoming more of a risk to lend to.  And that's going to roll downhill to consumer interest rates.

 

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Rainmaker
1,054,041
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Good post!  I hope all members read and forward your post!

Jul 30, 2011 07:41 AM #1
Rainmaker
375,391
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley Realtor since 1976; 408-373-4411

Can you imagine if these politicians who are rigidly sticking to their ideological principles were Realtors? 

"My seller's house is worth $X and we're not budging because we're RIGHT." "My buyer's says it's worth $Y and they're not budging because they're RIGHT."  Not too many transactions result.

I just hope their righteous intransigence doesn't cause rates to increase before we can get rid of them.

Jul 30, 2011 08:04 AM #2
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Sharon:   It's been a long time coming with this, but there's no way around it.  Our Country is struggling with debt. 

Lloyd:  The rate increase is inevitable.  That's what I'm hearing from the financial analyists I trust like Gerri Willis.

Jul 30, 2011 08:40 AM #3
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Dick Greenberg
New Paradigm Partners LLC - Fort Collins, CO
Northern Colorado Residential Real Estate

Hi Chris Ann - Right you are - there's no way out of this without interest rate increases. They have been held artificially low by the fed up until now to help a theoretical "recovery", but we're also going to see some inflationary pressures,  and the fed will have to act to tighten the money supply (assuming there is a supply of money out there somewhere). And rates aren't the only thing that will be affected. But if anyone is capable of locking in borrowing at today's rates, they're going to be in a very good position shortly.

Jul 30, 2011 09:24 AM #4
Rainer
478,183
Not a real person
San Diego, CA

I have only one thing to say about the debt ceiling, politics, and politicians:

Happy Saturday!

Jul 30, 2011 01:58 PM #5
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Dick:  I've been trying to have my Buyers see the time line here, but I think folks are waiting to see what will happen.  By then, it will be too late.

Russel:  You know, that's about the best anyone can say to all this.  Happy Saturday indeed!

Jul 30, 2011 02:35 PM #6
Rainmaker
1,075,329
Al Raymondi
Ocean View Realty Group in Ormond By The Sea Florida - Ormond Beach, FL
Ormond By The Sea Florida - Home and Condo Sales

Great post Chris Ann and you are correct that higher rates will likely be on the horizon.  Unfortunately the deficit spending in DC will not end anytime soon.

Jul 30, 2011 02:36 PM #7
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Al:  We can't have it both ways.  Spending so much with no tax increases.  Something's gotta give.  And a little of both are in order as far as I'm concerned.

Jul 30, 2011 02:43 PM #8
Rainmaker
1,767,844
Ginny Gorman
RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate - North Kingstown, RI
Homes for Sale in North Kingstown RI and beyond

Chris, I have one buyer who is sick about it after we discussed it, she gets it, it is a Fannie Mae REO that we have been waiting on since May & can't even do inspections because of numerous issues with Fannie which they now say should be resolved in a week...i doubt it now...I really don't believe most people understand the impact of this crisis...

Jul 30, 2011 11:36 PM #9
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Ginny:  I am with Dick above.  Interest rates have been held artificially low for years.   They are about to spring back up and it's making my stomach turn just thinking about it.

Jul 31, 2011 04:45 AM #10
Rainmaker
271,396
Dave Roberts
Healdsburg Sotheby's International Realty - Healdsburg, CA

Wait no more. CNN Money just reported that our borrowing costs due to the manufactured debt ceiling crisis are $1.7 billion and counting. 

Aug 02, 2011 04:24 AM #11
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Chris Ann Cleland
Long and Foster REALTORS®, Gainesville, VA - Bristow, VA
Associate Broker, Bristow, VA

Dave:  Translated to interest rates, what does that mean?

Aug 02, 2011 04:33 AM #12
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Chris Ann Cleland

Associate Broker, Bristow, VA
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