We've gotten a little closer to roller coaster status this week, with markets in Europe and Asia contributing to the highs and lows. Today's high, (for the bond markets, and therefore slightly lower mortgage rates), came from statements from the Fed chairman Ben Bernanke, who back pedaled from previous statements regarding the QE2 MBS/bond buying stimulus commitment. Ten days ago he had stated that there were signs pointing toward a more rapid economic recovery, so there may be a "tapering" of the stimulus. This pushed stocks much higher as well as mortgage rates. Today he indicated that the economy is really not recovering well after all, and the QE2 stimulus will likely continue through the remainder of 2013. So, rates moved back down slightly, as shown below.
Speaking of mortgage rates… I do want to caution you once again about advertised rates. My disclaimer below in
the rates available to consumers. Quite often you will see the
published rates from Fannie Mae or Freddie Mac, which are rates you
might get if you could buy direct from the
factory, but you can't! Also, rates in newspapers or magazines were
obviously submitted for publication well before you see them, and are
designed only to make the phone ring. Mortgage rates can change as many
as four times in a day, and we've seen a lot
of that lately. So, if you are inclined to talk about rates with your
clients, just realize that even if you get them off a website they are
most likely not accurate. They need to get their rate quotes from a
The housing market is still moving forward and analysts are predicting
an annual pricing increase of 8% for 2013. Along with this they are
also predicting housing starts to be up 25% in 2014. So the stage is
getting set for new construction to pick up the
slack in inventory. I'm hoping sellers who are on the fence with
existing homes are paying attention.
The supply and demand models that we learned about in economics 101,
would indicate that the current low inventory in housing would make this
a seller's market. But, I think you are seeing something very
different out there. We'll call it a transition market.
Perhaps the fact that many of the homes for sale are on the market
because the seller needs to sell. That need ultimately translates to
accommodating buyer's demands a little more than would otherwise be the
case. So, this means you will need to market each
home appropriately and independently. It's unfortunate that those
particulars are not figured into comps.