Hard to believe we are already knocking at the doorstep of summer. …Difficult to tell if life has just sped up with all of the technological advances or are we just getting older!!! The Federal Reserve announced today that they are leaving interest rates unchanged for the time being, but that the outlook remains that the economy is doing well and that inflation has ticked up enough to warrant more aggressive Fed policy at upcoming meetings. Remains to be seen, how many additional rate increases will occur for the balance of the year. General consensus is another two increases with a possibility of three. How does this translate to the overall mortgage interest rate environment? Difficult for mortgage rates not increase in lock step with these additional Fed rate increases. Even though rates remain at historical lower levels, we have all been spoiled with how low rates went. We all need to re-evaluate what higher rates mean to us individually and how this translates to the overall real estate market and economy. In addition, we need to incorporate the new tax laws into our mindset to further complicate matters. The net effect of new policies remains to be seen on how it relates to the real estate arena.
On a positive note, there are many exciting loan programs that have rolled out that allow us not to use tax returns or other traditional underwriting methodology. We need to move away from an interest rate driven financing market to one that is a “means to an end.” Needless to say, no one wants to pay a higher rate than is necessary, but sometimes we need to just get the deal done and accomplish our goal. There are still many traditional / standard lender’s we deal with that are extremely aggressive, but these banks are not for everyone…
The real estate market remains in good condition with properties listed at realistic prices, receiving multiple offers. Inventory remains tight, but an over looming question that needs to be answered is if one sells their house with a sizable gain, where do they move? The move up buyer is stuck between a rock and a hard place with higher interest costs and new tax limitations. Many of our clients have elected to scrap plans for purchasing a new home and instead opt for an extensive remodel of their existing house. We can assist with the cash out necessary for the remodel via a traditional refinance or we have construction loans available.
The demand for housing remains robust as Los Angeles continues to attract people from all over the globe. Who doesn’t want to live here!!!!
As always, please feel free to contact us with any what if scenarios or just to say hello!!
Gloria Shulman and Curtis Cohen