November 9th: 1989, 2012 and 2016
November 9, 1989: the Berlin Wall fell
November 9, 2016: Donald Trump declared winner of Presidential Election
But what momentous event occurred on November 9, 2012?
That was the first post on Oliver Reports and this is the 838th.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Open Houses Sunday November 20
Read Mortgage rates near 4%: no need to panic and then visit these Open Houses:
Marblehead Open Houses
Swampscott Open Houses
Salem Open Houses
Beverly Open Houses
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Mortgage rates near 4%: no need to panic
As anticipated in my Is this the end of ultra cheap mortgages? post last week, the rate on the 30 year Fixed Rate Mortgage (FRM) jumped to 3.94% this week, according to the latest Freddie Mac weekly survey. Before we all panic, let’s consider a few facts.
Mortgage rates are historically extremely low
Look at the chart below. Mortgage rates fell below 5% for the first time ever only in 2010. They averaged a little below 4% in 3 of the last 4 years, but even after the jump since the election rates are merely back to where they were a year ago and remain close to all-time lows. And during the boom years of 2004-2006 the average mortgage rates were 6.84%, 6.87% and 6.41%.
There is no clear correlation between mortgage rates and home prices
Data for the last 10 years for national home prices starts as the housing boom was already over, but the chart below shows how home prices tumbled from 2007 to 2012 at a time when mortgage rates were also falling. Once the market turned, the spike in mortgage rates in 2013 did not stop the increase in home prices.
The next chart shows in a little more detail what has happened in the last 4 years. All I can say is that I see no direct correlation in the chart above or the one below between home prices and mortgage rates. That is not to say that mortgage rates do not have an impact on home prices, just that they are not the only factor.
Is inflation going to rise?
Since the Great Recession, central banks have been pumping cash into world economies in an attempt to stave off deflation – falling prices. Why are falling prices so bad? Because some consumers will defer purchases in the belief that prices will be lower in the future. Since by some estimates consumer expenditure accounts for 70% of the economy, any concerted move by consumers to defer purchases would have a major negative effect on the economy.
So is inflation going to rise now that the Republicans control Congress and the White House? Probably, and that is the bet markets are making, causing the yield on the 10 year Treasury Note (10T) to jump nearly 0.5% in less than two weeks. And mortgage rates follow closely the yield on 10T.
Is renewed Inflation bad news for the economy?
As the Wall Street Journal put it: “The world should welcome higher long-term bond yields insofar as they signal a brighter outlook for economic growth and a return to moderate inflation after years of fear about falling consumer prices. Central banks have been trying hard—especially in Europe and Japan, without much success—to drag inflation higher. The long run of low rates also has battered banks, pension funds and insurance companies.”
Higher economic growth, the ending of the fear of deflation, relief for financial institutions – there’s a lot to like in moderate inflation – the key, of course, being moderate.
How does inflation affect real estate markets?
One of the key aspects of borrowing money in an inflationary environment is that the asset purchased will appreciate, while the loan will be paid back in depreciated dollars. The incentive, therefore, is to buy now before prices rise – the opposite to the concern in a time of deflation.
Will home prices continue to rise?
The chart below shows the growth in national home prices over the last 40 years. My reading of this is that we have now recovered from the sub-prime boom and bust cycle and that prices are likely to continue to grow modestly over time.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
New Listings week of November 18
A quiet week as we head into Thanksgiving:
Marblehead new listings
Swampscott new listings
Salem new listings
Beverly new listings
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Salem Q3 2016 Housing Market Summary
Through the Third Quarter, the median price of a Single Family House (SFH) in Salem rose 3% to a new high of $370,000, while that for a condo rose 4% to $280,000, also a new record.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Swampscott Q3 Housing Market Summary
Through the Third Quarter, the median price of a Single Family House (SFH) in Swampscott rose 6% to $485,000, while that for a condo rose 4% to $253,700. Both median prices remain well below their 2005 peaks.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Marblehead Q3 2016 Housing Market Summary
Through the Third Quarter, the median price of a Single Family House (SFH) in Marblehead declined by 1% to $612,500, while that for a condo rose by 18% to a record $372,500.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Beverly Q3 housing market report
Through the Third Quarter, the median price of a Single Family House(SFH) in Beverly rose nearly 10% to $440,000 and of a condo by 11% to almost $260,000, both reaching new all-time highs.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Lynn Q3 2016 Housing Market Report
Through the Third Quarter, the median price of a Single Family House (SFH) in Lynn rose 6% to $290,250 and of a condo by 8% to $196,000. Both numbers are within 1% of the record levels set in 2005-2006.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
Tonight’s Supermoon: what you need to know
Tonight’s Supermoon will be not only the closest and brightest supermoon of 2016 but also the largest since 1948, Bob Berman, an astronomer at the Slooh Community Observatory, told Space.com. What’s more, the full moon won’t come this close to Earth again until Nov. 25, 2034, according to a statement from NASA.
Click on Supermoon guide for a short video from space.com.
Open Houses November 13
Read What does the Election mean for real estate prices? and Is this the end of ultra cheap mortgages? before visiting these Open Houses:
Marblehead Open Houses
Swampscott Open Houses
Salem Open Houses
Beverly Open Houses (more…)
Is this the end of ultra cheap mortgages?
The increase in bond market yields this week raises the question of whether the era of ultra cheap mortgages is coming to an end.
Interest rates
The yield on the 10 year Treasury Note (10T) jumped from 1.79% last Friday to 2.14%, an increase of 0.35%. The latest Freddie Mac 30 year Fixed Rate Mortgage (FRM) of 3.57%, however, reflects data collected only between Monday and Wednesday this week. Bankrate quoted the FRM at 3.74% on Friday.
The rate on the FRM is most closely tied to the yield on 10T. The spread – the difference between the two yields – indicates the extra return investors want when buying pools of mortgages rather than Treasury Notes.
Over the last 4 years the average spread has been 1.71%. Following the leap in yield on 10T the spread was only 1.42%, clearly suggesting that the rate on the FRM will jump next week, as already foreshadowed by the rates quoted on Bankrate.
Will interest rates continue to rise?
It is a brave person who makes economic forecasts before we know what policies will actually be enacted but let me offer a few comments.
First of all, interest rates have been rising worldwide since the summer’s lows, as shown in this chart:
For several years, the gridlock in Congress has prevented any significant fiscal policy implementation to encourage economic growth. This has left monetary policy in the form of record low interest rates and Quantitative Easing – the buying of Government and other securities by the Federal Reserve – as the only available tool.
To the extent that Congress passes measures that stimulate growth and/or reduce the stranglehold that some regulations produce, so the dependence on lower interest rates as the primary tool to stimulate the economy will be reduced. Increased economic growth should be reflected in higher yields on the 10T and hence in higher mortgage rates.
How high will interest rates go?
Jeffrey Gundlach of DoubleLine Capital, a respected bond investor, thinks the yield on 10T could reach 2.35% in the short term, while prominent technical strategist Tom DeMark has suggested that 2.15% may be the near-term peak.
Going forward, a lot will depend upon the outlook for economic growth and inflation, while any improvement in the sluggish rate of economic growth of recent years would put upward pressure on wage rates, a key indicator the Federal Reserve considers when setting interest rates.
Is now a good time to lock in my mortgage?
In my What the Fed’s rate increase means for mortgage rates post last year I explained that the the Federal Reserve directly influences only short-term interest rates, while mortgages are priced off the 10T where yields reflect broader economic considerations.
Whether higher rates come from a strengthening economy or higher inflation, a reasonable case can be made that the era of ultra low mortgage rates may be about to end. But current rates under 4% are still historically very low and attractive, especially as a stronger economy would likely boost the demand for housing in market where supply is tight.
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
What does the Election mean for real estate markets?
As I write a blog on real estate, that will be my sole focus in commenting on the outcome of the Election.
The bull case
The removal of a lot of strangling regulations and the end of gridlock in Congress will produce stronger economic growth. Major infrastructure spending will boost jobs and wages at the lower end, while lower corporate tax rates and lower personal tax rates will produce increased personal wealth. Interest rates will rise, reflecting the stronger economy, and the demand for housing will increase. Greater wealth and confidence will provide a boost to the higher end of the market.
The bear case
The next President will, with the support of Congress, implement all the campaign “promises”, in particular those on trade protectionism, which would lead to a major recession. Interest rates will fall and the housing market will slump.
My view
Campaigning and governing are vastly different endeavours, which is why I wrote “promises” in the last paragraph. Since I am an optimist by nature, I find the bull case more plausible than the bear case.
For comment on the outlook for mortgage rates read Is this the end of ultra low mortgage rates?
If you are considering selling your home please contact me on 617.834.8205 or Andrew.Oliver@SothebysRealty.com for a free market analysis and explanation of the outstanding marketing program I offer.
Not sure which broker to use to sell your home? Read Which broker should I choose to sell my house?
If you are looking to buy, I will contact you immediately when a house that meets your needs is available. In this market you need to have somebody looking after your interests.
Andrew Oliver is a Realtor with Harborside Sotheby’s International Realty. Each Office Is Independently Owned and Operated
@OliverReports
New Listings week of November 11
Election plus Veterans Day = a modest number of new listings this week:
Marblehead new listings
Swampscott new listings
Salem new listings
Beverly new listings (more…)
Seth Moulton: let’s build the North-South Rail Link
Congressman Seth Mouton has just written this North-South Link Key to Boston Economy article in the Boston Herald.
Rep. Moulton argues that the construction method for the Link would be entirely different from that of the Big Dig, and that both North and South Stations would continue without interruption, while the roads would stay open and uninterrupted.
Rep. Moulton quotes the new Crossrail link in London, which is 5 times the length of the North-South Link and is being completed on time and on budget (another huge difference from the Big Dig), while the Swiss have just opened the 35 mile Gotthard Tunnel under the Alps to provide a high-speed rail link between Northern and Southern Europe.
For those of us who live on the North Shore, a North-South Rail Link would provide a great boost. Please take the time to read about the proposal and become informed on the topic. (more…)
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