For our communication this week, we compiled a few of the headlines making recent real estate news. These topics impact housing and the economy, and therefore oftentimes the local real estate market. Take a look at some recent news:
Federal Reserve Raises Interest Rates:
The Federal Reserve raised the interest rates this week, for the third time this year. The rates rose a quarter percentage point, to a range of 2% to 2.25%. Chairman Jerome Powell said,
“‘Our economy is strong,’ Powell said at a press conference on Wednesday. ‘These rates remain low, and my colleagues and I believe that this gradual returning to normal is helping to sustain this strong economy.’“ Credit cards, HELOCS, and adjustable rate mortgages will likely see the impact shortly, as their rates are usually tied to the prime rate, which is impacted by the Fed’s benchmark rate (https://www.usatoday.com/story/money/2018/09/26/fed-mortgages-credit-cards-bank-savings-affected/1426555002/). According to a USA Today article, “The average 30-year fixed mortgage rate has already climbed from about 4 percent in early January to 4.65 percent, largely because investors expect federal tax cuts and spending increases—along with a healthy economy—to push inflation higher. The likely rate hike on Wednesday is already baked into mortgage rates (https://www.usatoday.com/story/money/2018/09/26/fed-mortgages-credit-cards-bank-savings-affected/1426555002/).”
Existing Home Sales in July/August:
Economist Elliot Eisenberg notes, “With existing home sales flat in July, and August at a rate of 5.4 million/year (solidly down from a peak rate of 5.7 million/year last November), I think existing sales move sideways from here on. Rising prices, higher interest rates, and tight inventories make a meaningful rise unlikely despite a strong labor market and rising wages. That said, new home sales should keep rising by 10%/year for a while longer(https://econ70.com/2018/09/24/split-sales/).”
Mortgage Costs Remain Below 2006-2007 Peak
With news of rising interest rates and low inventories, homebuyers may be concerned about rising mortgage costs. However, according to real estate data from CoreLogic, homeowners are still paying less than they were in 2006-2007. “CoreLogic researchers note that mortgage payments still remain below records in most of the country because mortgage rates in June 2006 were about 6.7 percent. Now the average mortgage rate is about 4.6 percent.” The article also notes the high point in 2006 reflects an abundance of subprime and other risky products that were widely available then.
These are just a few of the news highlights. As always, we would love to discuss real estate news with you, local or national. We will be holding an open house this Saturday from 1-3 at 2027 Kingfisher Court. Stop by and say hello!