Interest Rates are going up? and home prices also going up? What is going on?

Asked by Ray, Corona, CA Fri Sep 6, 2013

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Fri Sep 6, 2013
The Federal Reserve Board has been artificially suppressing or manipulating the markets (economy) by spending $85 BILLION/month on bonds/treasuries because no private investor wants them.

The govt. is going to start tapering (less buying) of how much they spend and that is freaking out investors so they sell off what they own and that causes bond pries to drop and mortgage rates to rise.

This is also a concern because when the Fed Reserve literally prints and spends $85 BILLION/month, it dilutes our dollar and inflation sets in......which is very bad for mortgage rates and returns on the investments.

And as you are aware, there is little inventory on the market because many people still cannot sell due to lack of enough equity and still many homes that are being help by banks....they did this to prop up values in hopes people would not bail.

So your future is higher rates and possibly lower home values once inventory kicks up....which it is starting to now because people qualify for less due to higher rates.
2 votes
Brad that is some really insightful info.
Flag Fri Sep 6, 2013
Elise Timpe, Agent, Corona, CA
Mon Sep 16, 2013
Supply and demand. We have short supply of homes and plenty of buyers. Rising interest rates means that there are a surge of buyers coming in before rates go higher.

On the other hand, we're seeing more people deciding to sell. That is beginning to slow down the frantic pace in multiple offers and rising prices we've been experiencing lately.
1 vote
John Juarez, Agent, Fremont, CA
Fri Sep 6, 2013
You are implying that increasing interest rates should make it more expensive to buy therefore decreasing the number of buyers who could afford my own. Makes sense to me.

The problem is that there are still lots of buyers and there aren't enough houses for sale to satisfy demand. Demand continues to exceed supply and that continues to drive up home prices. If interest rates continue upwards we may see a change.
1 vote
Connie Vedom…, Agent, Corona, CA
Fri Sep 6, 2013
Hi Ray. Interest rates have gone up and are expected to increase, but probably not as quickly as they did since June. They were kept low for several years to help boost the economy. Many homes now are being listed at a higher price but we are seeing many price reductions, as we do not have the same market we had in February through May where the inventory was lower and buyers were willing to pay more than listed price AND waive the appraisal value. They were willing to pay the difference between the value and purchase price of the home. Buyers are offering less than listed price in most instances due to having to higher interest rates. If you can qualify for a home now, contact a direct lender and get pre-approved for a specific price range, and then you can begin looking. Most offers are presented with a pre-approval letter. Good luck. There are many nice homes available in Corona and more coming on the market weekly.
1 vote
Scott Godzyk, Agent, Manchester, NH
Fri Sep 6, 2013
There is a shortage of homes for sale and a steady supply of buyers which keeps prices increasing. The interest rate is going up due to the government not putting as much money into treasury bonds as they used to. Supply and demand states that when buyers stop buying if rates go too high, rates will have to be put back down to entice buyers.
1 vote
Cindy Davis, Agent, San Diego, CA
Fri Sep 6, 2013
it's just the nature of the market. Interest rates wre kept artifically low for several years to assist the struggling housing sector. Now that things have improved a bit, interest rates are moving up.

As for housing, value have gone up signficantly this year. The winter market will slow things down a bit - but low inventory levels have been the cause of hiigher home prices.

Good luck to you.
1 vote
I advise my buyers that if they have the down payment and stick with a mortgage payment they can afford, then owning a home is still one of the best investments they will ever make.
Flag Mon Sep 9, 2013
Do you advice us to wait and not buy now?
Flag Fri Sep 6, 2013
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