Last Wednesday the Federal Reserve decided to leave the federal funds rate alone, for the time being.
"The Fed is in a quandary. The economy has slowed, led by a decline in home sales and rising inflation, stemming primarily from increasing energy prices. The Fed's primary role in relation to the economy is to combat inflation and preserve economic growth. To combat inflation, the Fed will ultimately have to increase interest rates in coming months. What Does This Mean to You?"
Here's what my colleagues at You Should Own have to say:
"If you're looking to buy a house, consider these key points:
- Home prices in some areas are at five-year lows, while personal incomes in that same period have increased.
- Homes are more affordable for many right now, particularly first-time home buyers.
- Sellers are extremely motivated and many buyers in our area have benefited from the unbelievable deals that exist today.
- Experts foresee a strong rebound in home prices when the economy
begins to recover, according to a new report from the Joint Center for Housing
Studies. - That means buyers today will be sitting on valuable properties tomorrow."
Much is made of the recent foreclosures and subprime loan issues that have stalled the market, but due to the overall streamlining of loan underwriting due to uniform credit scoring and automated underwriting, the largest rise in homeownership occurred between 1994 and 2001. According to Harvard's Joint Center for Housing Studies' 2008 report, unless another one million homeowners lose ownership it will not dip below the 2000 level of ownership. Even if that does occur, "once the oversupply of housing is worked off and home prices start to recover, the use of automated underwriting tools, a return to more traditional mortgage products, and the strength of underlying demand should put the number of homeowners back on the rise."
It's been noted for several years now that the formation of new households due to changes in the population will impact the demand for housing over time (including the current Harvard report), so I'm still betting that "buyers today will be sitting on valuable properties tomorrow."
Long Beach
long beach real estate
