Federal Reserve Move Could Be A Good Sign For Real Estate Market

Dated: 12/18/2015

Views: 2605

This week The Federal Reserve raised target interest rates for the first time since June of 2006.

 Douglas Yearley, director and CEO of Toll Brothers Homes told CNBC "We're actually thinking that this is going to bring out some pent-up demand, it's actually going to move some demand in, and we're pretty optimistic about where we go."
While housing starts are down from where they were in June 2006 (1.8 million compared to December 2015's 1.06 million), many other measurables are seemingly improved.  Monthly job creation, 30 year mortgage rates, consumer spending, inflation rate, and car sales are all looking better now then they did at the time of the last Federal rate raise.  In fact, at 3.94%, 30 year mortgage rates are only about a point higher than their record low.  Now, mortgage rates will gradually increase.  However, it is reasonable to predict that we could see an uptick in demand as those benefiting from an improving economy look to buy homes before these mortgage rates get considerably higher.  In 2004, it seemed a Fed raise caused an already hot market to increase in activity as buyers wanted to get low rates before it was too late.  

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