Fed pauses interest rate hike... will real estate pick up?
After 17 straight rate hikes and two years... the Fed has finally paused on increasing interest rates. Every one with home equity lines of credit and 2/28 adjustable rate mortgages can finally breath a sigh of relief.
The relationship between real estate prices and interest rates.
Here is an interesting quote from the Fed speech...
"Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices,"
It's interesting to note that a main reason indicated is the "gradual cooling of the housing market" which tells you just how much our economy depends on the real estate machine.
Now that people are no longer pumping billions into the economy from their "home atm's" the impact is really felt. Just how much, time will tell.
Will real estate pick up?
So now the burning question. Since we have a pause in interest rates which should lead to some stability in mortgage rates... will that raise the general publics' outlook on real estate prices again?
Damage already done?
Consider that the majority of commercial real estate is financed by mortgages priced on the prime rate. So businesses have already felt a giant crunch in the bottom line with increased "site" costs and lease fee's. What do they do... stop hiring and raise prices... (as evidenced by missed job growth and inflation).
What do you think?
As a real estate professional or home buyer do you think it's too late and the real estate market will continue to cool or will it light up again?
The relationship between real estate prices and interest rates.
Here is an interesting quote from the Fed speech...
"Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices,"
It's interesting to note that a main reason indicated is the "gradual cooling of the housing market" which tells you just how much our economy depends on the real estate machine.
Now that people are no longer pumping billions into the economy from their "home atm's" the impact is really felt. Just how much, time will tell.
Will real estate pick up?
So now the burning question. Since we have a pause in interest rates which should lead to some stability in mortgage rates... will that raise the general publics' outlook on real estate prices again?
Damage already done?
Consider that the majority of commercial real estate is financed by mortgages priced on the prime rate. So businesses have already felt a giant crunch in the bottom line with increased "site" costs and lease fee's. What do they do... stop hiring and raise prices... (as evidenced by missed job growth and inflation).
What do you think?
As a real estate professional or home buyer do you think it's too late and the real estate market will continue to cool or will it light up again?
2 Comments:
Too early to tell.
If they pause next month as well and we see the energy market stablize -- then it might speed up.
But, as we saw in the stock market, the economy doesn't believe that the FED is through raising rates.
Toby, Realtor
Todays news from Toll Brothers may enlighten many as to the severity of the situation.
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