The Brighter Side

It is hard to look at the bright side of a very cold winter which seems to have interrupted the economic recovery and kept most of the nation indoors for much of the winter. Cold winters also increase the price we pay for energy and this winter has been no exception. So where is the bright side? The bright side will be found within the real estate sector. For years the nation’s real estate has been on sale with ridiculously low interest rates and low home prices.

Last year, the sale waned a bit as demand picked up. Homes were still affordable in most areas of the country — especially as compared to renting. However, rates did rise for most of last year and home prices escalated as well. Well, severe winter weather also slows down the pace of home sales. Who wants to go look for a new home when it is covered in snow? Even potential sellers are less likely to list their homes in frigid weather. The tough winter weather has slowed down the increase in home prices and given us a respite from rising rates. At least temporarily.

We emphasize the word temporarily. Winters don’t last forever and when the snow melts there will likely be latent demand. We are not saying that real estate will get smoking hot — but we do know that there will be many who will take advantage of the opportunity that this winter has presented. We can’t make predictions but we do know that the winter will end and people who are suffering from cabin fever will come out and typically look at homes and neighborhoods. If the rush becomes really strong, then the temporary respite in rates and prices will not last long. If it is a more orderly return to normal, the effect may be mitigated somewhat.

The Markets.
Rates were stable in the past week, holding near lower levels after dropping over the past month. Freddie Mac announced that for the week ending February 13, 30-year fixed rates increased to 4.28% from 4.23% the week before. The average for 15-year loans remained at 3.33%. Adjustable rates were mixed as well with the average for one-year adjustables rising to 2.55% and five-year adjustables slipping to 3.05%. A year ago 30-year fixed rates were at 3.53%. Attributed to Frank Nothaft, vice president and chief economist, Freddie Mac — “Rates on home loans were little changed amid a week of light economic reports. Of the few releases, the economy added 113,000 jobs in January, which was below the market consensus forecast and followed a slight upward revision of 1,000 jobs in December. Meanwhile, the unemployment rate fell to 6.6 percent, which makes thirteen consecutive months without an increase.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Call or email me if you need quotes for a specific scenario.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s