The Real Story …
News and commentary about the real estate market and related topics.
Dave Parrish, ABR ®, CRSA, CSP, GRI, ePRO ®, REALTOR ®, RealtySouth
The opinions expressed here are my own and don’t necessarily represent those of HomeServices South.
Bad News, Good News, Bad News…
Seems there’s a never ending cycle of Good News and Bad New as our local and international markets undergo this tumultuous period. As a part of what I discuss here, I often touch on the news resulting from those changes… some good news… some bad news. As the world continues those changes, some of that news changes. My and industry predictions change as the result of the good news bad news cycle. This is my rather awkward way of introducing a correction of a prediction made here earlier this year.
You may remember the prediction of rising interest rates caused by the Fed’s withdrawal from the purchase of mortgage backed securities effective March 31, 2010. And true enough interest rates did make a slight up tick in April … but then bad economic news popped up in another part of the world… Europe and especially Greece. In fear of the changes brought about by this economic crisis, investors who had their money in the European markets began to look for a safe harbor too protect their investments … So now we are seeing a return to investment in the American markets and a reversal of our earlier predictions of rising interest rates, at least for the short term. Good News for the American Housing Market!
While some negative forces still exist in the housing market, this bit of bad news/good news will extend the increased affordability of housing beyond what had been expected. Yes, this is still a wonderful time for buyers looking for that first home or buyers looking to move up… Perhaps not so good for those looking to make a lateral move or down size. Rather than the 5.5% rates anticipated for June, we are now back in the sub 5% range with some mortgage rates below the 4.5% mark. This average reduction of .5 to .75% translates to an increase in buying power of around 10%.
At the same time we have been experiencing a nice up-tick in housing sales largely caused by the tax credit incentives while housing prices are tending to stabilize (the decline in prices has slowed significantly). While industry experts had feared that the improvement in home sales might be temporary, it appears that sales may be remaining stable and even increasing slightly. Moreover, it appears that the activity caused by the tax credit program may have resulted in renewed interest in the housing market… What I have observed as a tearing down of the wall of fear that had been holding so many buyers back.
Now there is no reason to believe that the cycle of Good News / Bad News has been broken… However, I am comforted somewhat by the words of Leo Tolstoy: Everything is always okay in the end, if it’s not okay, then it’s not the end.
I’m hoping that this is good news for you and that you will be able to benefit from this market!
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