slowing down

[SK in CV]

[quote=The-Shoveler]Yea OK but slowing market right at the usually hottest period I think is a sign,
I guess we need to see what the effect the recent rise in rates will have and where rates go from here.
Bond market is not happy.

Would not be surprised to see the Fed hit the panic button.[/quote]

I’m not sure what you mean by the bolded part. So far anyway, there has been no indication the economy as a whole is changing significantly. Either heating up or slowing down. What we’ve seen in the RE market nationwide is a slow and steady increase in inventories since they bottomed right around the first of the year. We’ve seen the same thing in some (but not all) regions in SD. But there are still historically low levels of inventory, both in SD and nationwide.

Beyond that, what the Fed announced last week is that they’re doing absolutely nothing different today than last month, and don’t anticipate doing anything different in the immediate future. The “panic button” would imply a change in policy. I don’t see that happening.

[The-Shoveler]

A little over a month ago you could get a mortgage at about 3%, today it’s about 4.6%.

That’s about as fast as rates have ever moved up.

Someone I think will say something we push 5% IMO.

Pension funds that own treasuries are getting hit fairly hard BTW.

[spdrun]

Where are you getting 4.6%? Average 30yr fixed is about 4%.

[The-Shoveler]

I think you would need to pay points to get that,

Anyway,

Historic Move in Rates

https://www.wellsfargo.com/mortgage/rates/

[ocrenter]

[quote=earlyretirement]I imagine they will get even slower as the stock market bubble deflates as well. Things don’t move in straight lines as I always say. I know LOTS of people that saw the stock market keep going up so they entered probably at the wrong time.

As the stock market deflates, there should be some pain with the “wealth effect”. Over the past 2 years many people got more confident and their consumer spending and appetite for purchasing including real estate went up.

It will be interesting to see how slow things get as the stock market deflates.[/quote]

Agree, excellent point about the stock market and the psychological impact on the real estate side. Especially with the overly exuberant rate of increase we seen recently.

[ocrenter]

[quote=The-Shoveler]I think you would need to pay points to get that,

Anyway,

Historic Move in Rates

https://www.wellsfargo.com/mortgage/rates/%5B/quote%5D

Like someone mentioned on JTR’s comment section, the increase in interest rate certainly make quite an impact in purchase power. At the last go-around, the lenders came in and provided progressively creative financing. Hopefully we would not see any additional fuels to try to keep the fire burning this time around.

[SD Realtor]

arrrrggggg….

Sometimes it can be so challenging reading posts.

No a little over a month ago you could not get a 3% mortgage. You could get perhaps a 3.625% rate. That same mortgage today with the same points is close to 4.5%. Rates move up instantaneously on days when the benchmark moves but take a few days to retrace when the benchmark goes the other way. Yes this does affect buyers.

I am not sure what panic button the FED can do. The FED buys bonds at auction. They buy MBS, they buy what they can buy. They cannot directly manipulate the yields on treasuries on a given day. Aye caramba. I do believe manipulation of financial markets is a given (see PPT) but that will not really affect local housing markets. To say that this is happening when the market is hot makes no sense. Any market is hot and then it cools down.

Many statements here mimic those posts back in 2006 that were ripe with titanic like prognostications. They were wrong then and they are wrong now.

I will maintain what I have always said which was that this hot market will normalize. Furthermore the only thing that will cause a serious problem in the housing market will be interest rate shock. Now this could be a precursor to that shock but I doubt it. The real question is, when will rates start to cause a tangible effect. Hard to say but my gut tells me if we hit a 6% rate then that will
cause pain. Take a 600k home with 20% down. At 3.5% your p/i is around 2155, at 4.5 it is 2430, at 5.5 it is 2725 and at 6.5 it is 3030. So in about 6 weeks we have added around 280 smackers per month to a payment. That hurts some and has an effect. At 5.5% we are adding almost 600 clams a month, close a 20% higher payment. To me that will indeed claim some buyers. However the market will also respond and sellers will need to adjust pricing. We will see what happens.

[paramount]

A little over a week ago,I was offered 4% through box home loans with basically no points. Today I’m looking at 4.75% with the same points/cost. I didn’t see that coming, damn I’m pissed – I procrastinated.

[dumbrenter]

[quote=paramount]A little over a week ago,I was offered 4% through box home loans with basically no points. Today I’m looking at 4.75% with the same points/cost. I didn’t see that coming, damn I’m pissed – I procrastinated.[/quote]

No, you were hoping it would go down 🙂

[dumbrenter]

[quote=SD Realtor]Take a 600k home with 20% down. At 3.5% your p/i is around 2155, at 4.5 it is 2430, at 5.5 it is 2725 and at 6.5 it is 3030. So in about 6 weeks we have added around 280 smackers per month to a payment. That hurts some and has an effect. At 5.5% we are adding almost 600 clams a month, close a 20% higher payment. To me that will indeed claim some buyers. However the market will also respond and sellers will need to adjust pricing. We will see what happens.[/quote]

SD Realtor, what percentage of the buyers do you think in the last 3 years have taken on ARM as opposed to 30-yr loan?

[spdrun]

Unless the mortgage is assumable, even with a fixed loan, the buyer will be paying current rates. Market will have to adjust pricing to make sense for buyers, not current owners or sellers.

[SD Realtor]

DR very few. Most of them used fixed rate conforming loans. Some used FHA. However in no way do I see any sort of squeeze coming because alot of people carrying arms. The rates were so low there was no reason to.

[The-Shoveler]

Looks like they are already talking.

I wonder if rates go back to 3 to 3.5% what effect that will have, my guess is foot back on Gas…

FED: Guys we were just kidding really about pulling back.

The Fed’s unusual bond purchases have given it far more influence over the market than at past turning points for interest rates. But Fed officials are clearly unhappy with the extent of the reaction to Mr. Bernanke’s statements. On Monday, some top Fed officials made public comments that appeared to be aimed at calming some of the market’s wild selling. Narayana Kocherlakota, the president of the regional Fed branch in Minnesota, said in a statement on the bank’s Web site that the Fed’s recent communications had left the “public with large amounts of residual uncertainty.”

Mr. Kocherlakota emphasized that the Fed still planned to support the economy until it grew significantly stronger.

[SK in CV]

TS…when did they take their foot off the gas?

[The-Shoveler]

Last week,
FED SUGGESTS IT’S CLOSER TO SLOWING BOND PURCHASES

http://bigstory.ap.org/article/fed-says-it-will-continue-85b-bond-purchases

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