INTEREST RATES AFFECTING REAL ESTATE
INTEREST RATES AFFECTING REAL ESTATE WHAT'S HAPPENING TODAY ACROSS OUR NATION!VALUES HAVE FALLEN THE PAST 3 YEARS IN REAL ESTATE FROM 10% TO MAYBE 50% IN SOME AREAS. I BLAME THE FEDERAL RESERVE AND OUR BANK REGULATORS FOR PUTTING US IN A RECESSION. THIS STARTED IN EARLY 2002. After 9-11, the stock market was down and the interest rate was still a little high. Rates came down through 2003. Stock market was on the rebound and interest rates were at its lowest. Everyone was making money and this was good. But, I feel the Feds have reduced interest rates too fast. This was discussed by many in the real estate industry. Didn't most people question why do rates have to continue downward at the rate they did.THIS IS WHAT HAPPENED!Many home buyers were able to afford a home at below prime. Many loans were processed with adjustable rates. The payments were very attractive. What were people thinking about? Inerest rates were at their lowest since the 60's. The rates had only one way to go and that was up! Loans were closed with home owners borrowing up to 105% tovalue. Regulations were slackened and lenders took too many marginal loans. Many loans were sold off so no need to question sub-prime mortgages! You and I know this type of situation will cause havoc if ,no when rates are increased. Gee ,what happened to rates? Up,Up, and away they went. The Feds feared inflation. There was some,but not run-a-way. So here we go again. We were spoiled with the low rates. There was a lot of speculation across the country. Money was very easy to get. NOW, rates increased,but too fast. The Feds stopped a freight train. They slammed on the brakes!BUSINESSES TOOK NOTICE!All types of businesss were forcasting for the near future. Therefore,they pulled back on spending. Capital expenditurs were put on hold,etc. Consumer spending slowed down. The public slowed it's purchase of big ticket items. I'll give an example of what happens when a home is purchased. The home owner will purchase appliances,carpet,paint,furniture,decoritive items, remodeling material products,etc. Also, most people forget others involved in the purchase. They include a lender, a real estate co.,a title co. an appraiser,a home inspector,an insurance co.,maybe a moving co.,etc. Add all the revenue spent on a home purchase and there is an additional minimum of $20,000 to others.Multiply this 100s of 1000s of homes every year.Google me-Hans Regnier
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3/13/08
by Hans Regnier GOOGLE ME