Mortgage rate have fallen

Mortgage rates have fallen for the last seven consecutive weeks. Analysts stated that the reason for this decline was because there wasn’t as great of an increase in job creation as was expected. Since there is less job creation there is less inflationary pressure on the economy. The article also stated that there would be an increase in mortgage rates in the future, but that it will be at a constant, steady rate. The article also went on to say that this steady increase will keep the real estate business able to still make strong sales in the future. Do any of these factors play into the increase sales in real estate market in Cedar? Cedars homes are selling like hotcakes right now. I guess a lot of Cedar sales have to do with Californians escaping. What do you think?

1 comment:

Dr. Tufte said...

-2 on Marie's post for multiple spelling mistakes.

I don't think falling rates have much to do with Cedar's booming real estate market. On a $200K house, a 1/8 percentage point change in rates is about $20 per month.

Have you ever heard anyone say: "Hey honey, houses are $20 per month cheaper, let's go buy a couple?"

Having said that, remember that trick from macroeconomics that the price of a bond is inversely related to the interest rate? Well, the same thing works for other assets like houses. So, every time that interest rates drop, the owner's of all houses have their (paper) wealth go up. If the market is liquid, they can turn that paper gain into a real one. That's what's going on right now.