Although it’s impossible to predict the bottom of our real estate market with anything other than months of perfect hindsight after the fact, who can blame home buyers in this economy for at least attempting to time it to their advantage? In the best of times, saving big on one of life’s biggest purchases is as American as apple pie. In troubled times, it’s a daily crusade.
Yet, even if one could magically time bottoming home prices to the split second, you would still make a tactical mistake as a would-be borrower if you failed to notice a similar bottoming-out of mortgage interest rates. Indeed, by allowing interest rates to climb while you wait for prices to fall, you can easily end up paying more for a property than if you actually bought it at today’s price while locked into today’s historically low interest rate. That rate is presently hovering around 4.88%, give or take.
Meanwhile, there’s scarcely an expert on the market who doesn’t fully believe that mortgage rates have but one way to go—up. Rates have essentially been held as low as they’re likely to go for quite some time now in order to stimulate sales. However, March 31st is expected to mark the beginning of a trend toward fewer stimuli and more tough love for the housing market—mainly in the form of higher interest rates.
That day—the last of this year’s first fiscal quarter—is the deadline the Federal Reserve has given itself to begin scaling back on its widespread purchases of mortgage-backed securities. Once this deadline has passed, most experts believe the Fed will begin in earnest to wean itself from propping-up a market that is already showing encouraging signs of sustaining itself through the lowest prices of a decade.
This is an audience participation post in which you are invited and encouraged to weigh-in with your opinions on one of our region’s most pressing economic issues. But first, read on.
