Remember all that talk about rising rates in 2019 and how it would impact buyers and sellers? Rising rates absolutely impacted buyers in 2018 in a negative way, but we’ve gotten a reprieve of sorts in 2019 for various reasons. The US-China trade war benefits home buyers and sellers, and we’ll explain how.
Rates slipped back in the 1st quarter of 2019 because economic conditions didn’t warrant rising rates, and because inflation had been tame. Back in April we wrote about rate drops as everyone speculated how long they might last. Rates are affected by economic news and wildcards, and a wildcard just happened.
As soon as China announced retaliatory tariffs on the US last Monday there was a flight to quality, which means investors put money into the safety of 10-year US treasury notes. This drove the yield curve down quickly. As we know, most 30-year mortgages are pegged to the US 10-year Treasury note so this trade war became an instant boom to buyers and sellers.
How long will this window last? Your guess is as good as anybody’s. If the trade war becomes protracted, it could lead to inflation as goods and services become more expensive. Or perhaps companies will find suppliers in other countries and the effects will be minimal. Because this could cause a global slowdown, it could tame inflation worldwide.
Some have suggested the US could devalue the dollar which would help trade imbalances and really put pressure on China. To do this we could lower interest rates. There are a lot of strategies in play right now, and nobody can predict what will happen with certainty.
Our best advice would be taking advantage of the low rates while they last. They could be here for a little while or they could vanish like a blip on a radar screen. With rates around 4%, buyers’ purchasing power is about 11% more than it was last year. This opens more buyers for each home, and let’s buyers stretch higher if they need to.
Lower rates should also help the housing market. Last year there was downward pressure on prices because of rising rates. With rates lower again that pressure has abated. Job growth has been stellar, so if rates stay this low, we could have a pretty good run with increasing home sales.
We’re not sure buyers understand the opportunity they have right now. Sellers have the same opportunity, because when they sell, they usually buy another property. Those sellers that sell and buy now will save big money on their next mortgage, if they act soon enough.
We’re not trying to be the expert and tell you how long this will last. We are telling you there is an opportunity for those in a position to take advantage. Borrowing costs can make a huge difference in the long-term success of your financial well-being.
There is more inventory for buyers now. Many sellers couldn’t sell before because there was no place for them to go. That may not be the case now. Go to www.LeeCountyOnline.com and look around. You’ll see more homes on the market than last year, and there are some excellent buys if you know where to look.
This website allows you to see all the homes on MLS in real-time. No more waiting for days or weeks for new listings to appear on those other sites. If a seller reduces their price, you’ll be the first to know. Our website produces listings in real-time so you have a definite advantage. The best listings go before they even hit those other websites, so you can beat out other buyers to hot new listings.
Our agents are out showing daily, so we know the best homes. Give our agents a call at 239-489-4042 and we’ll be glad to help you. If you have a home to sell, ask for Sande or Brett Ellis.
Let’s find you your next home before rates go up again. We’ve got a window. All we know is it’s open. We don’t know for how long.
Good luck and Happy House Hunting!