“Rick Fisher exemplifies the type of professional we designed this award for,” says Chad Golladay, Executive publisher of Broker★Agent™ Advisor. “A credit to their company, profession, and community at large both inside and outside of real estate; one with whom the honor is truly ours in being able to share this award.”
The Fed just raised interest rates to banks. How does that affect me?
Let’s give a little background on the Fed:
The Federal Reserve Board (the Fed) controls the Fed Funds Rate and the Discount Rate. These are overnight loans from bank to bank or from the Fed to member banks. The Fed adjusts the rate to influence the economy. For example, if things are going well, a rate increase may slow inflation. If the economy is struggling, a rate drop could be the boost it needs.
Two important things to remember:
– The Fed can influence, but does not directly set, consumer rates.
– The Fed’s rates are short term and often do not impact longer term rates, such as mortgage loans.
Why all the fuss?
Increases in the Fed Funds rate can cause banks to raise their “prime” rates, which are often used to calculate costs of revolving credit or home equity lines of credit (HELOCs).
What about mortgages?
Mortgage loans are a different animal, so to speak. The “agencies” (Fannie Mae and Freddie Mac) pool them together and sell them as mortgage bonds. The amount investors pay for these bonds directly influences mortgage rates.
When the Fed moves, it generally provides lots of warning, and markets have already had a chance to react. Markets are constantly responding to other factors as well, from the stock market to global events to consumer spending. In the end, no one can say for certain what the reaction to Fed moves will be.
MARKET UPDATE FOR SEPTEMBER
As anticipated at the outset of the year, demand has remained high through the first three quarters of 2016, propping up sales and prices despite heavy reductions in inventory and months of supply across the country. With rental prices and employment opportunities in a consistent climb, year-over-year increases in home buying are probable for the rest of the year but not guaranteed.
New Listings were down 3.6 percent for Single Family homes but increased 3.5 percent for Townhouse-Condo properties. Pending Sales decreased 40.1 percent for Single Family homes and 43.8 percent for Townhouse-Condo properties.
The Median Sales Price was up 5.3 percent to $632,000 for Single Family homes and 2.9 percent to $410,000 for Townhouse-Condo properties. Months Supply of Inventory increased 2.9 percent for Single Family units and 3.6 percent for Townhouse-Condo units.
In general, today’s demand is driven by three factors: Millennials are reaching prime home-buying age, growing families are looking for larger homes and empty nesters are downsizing. However, intriguingly low interest rates often prompt refinancing instead of listing, contributing to lower inventory. Recent studies have also shown that short-term rentals are keeping a collection of homes off the market. Courtesy of Pacific West Board of Realtors.
We are experiencing low inventory of listings for sale in Orange County as mortgage rates have slowing been rising. This has resulted in houses selling fast and some with multiple offers.
According to RealtyTrac, foreclosure levels dropped 15% in November.
Another sign the economy is improving. With limited inventory on market, buyers are looking at less inventory to pick in housing availability.
Hoping everyone has a Wonderful Thanksgiving with their family and friends.
Remember our troops, who are protecting our country and can not be home with their families.
Last, I wanted to take a moment to thank all my wonderful clients, vendors and friends who have made this a special year.
Rick Fisher, Broker at Rick Fisher Realty, Inc.