Posted by 101livescan on 8/20/13 9:08pm Msg #481324
The Director of RE Economics of Property Radar says:
Despite the recent jump in mortgage interest rates, July 2013 sales were at their highest levels since July 2006. Numerous California real estate professionals told me the recent spike in mortgage interest rates encouraged a lot of undecided people to get their properties listed and sold while they still had the chance. Since the end of July, mortgage interest rates have drifted higher in response to the nearly 30-basis-point jump in the 10-year Treasury note. I suspect the recent mortgage interest rate increase will likely push more fence-sitters into the market, driving up August sales as well.
Longer-term, however, rising mortgage interest rates will eventually depress sales and push prices lower in six to eight months hence.
Another trend to watch is median prices. For only the second time since January 2012, California median home prices fell, suggesting that the rapid price increases we have seen over the past 18 months may take a breather as the housing market digests the impact of higher mortgage interest rates.
The decline in investor purchases since late last year also bears notice. While there has been broad-based concern over what would happen when the larger investors begin to exit the market, the jump in July sales suggests that there is enough pent-up demand from non-cash buyers who have been shut out of the marketplace to make up for the drop-off in investor activity.
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Reply by JanetK_CA on 8/21/13 3:34am Msg #481348
Another factor we might have to watch out for is what happens when the next national debt increase becomes necessary. If this becomes a battle ground and congress risks the US defaulting on bond payments, etc., I've read that that could also cause a spike in interest rates that could make things much worse.
[BTW, I tried to be careful to not bring any politics into this, so if anyone has any comments that involve commentary on either side of that issue, please take them over to JP. Thanks.]
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