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ALL ABOUT AFFORDABILITY

Home sales is all about affordability, the lower the cost (price of property + interest paid) of ownership, the more sales there will be.

We have been pounding the table that the bottom is in and interest rates will rise by Spring. Here is more information to back that up:

In an effort to stimulate home sales, the Federal Reserve, in an unprecedented move, has purchased of $1.25 trillion of mortgage securities and plans to stop as soon as March, driving up interest rates on new home loans. Analysts at BNP Paribas SA, Credit Suisse Group AG and JPMorgan Chase & Co. say the extra yield over benchmark rates that investors demand to hold the securities will widen as much as half a percentage point as the Fed stops purchasing. The 11- month-old program has reduced yields, which guides lending rates, by about 1 percentage point, BNP estimates. Along with the Federal Tax credit incentive, which ends April 30th, sales number should keep increasing for the next several months, then hit a ‘brick wall’.

If you are planning to sell in the Spring or Summer, you should move up your marketing schedule to as early as possible. If you are planning to buy, right now is time.

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This entry was posted on Thursday, December 31st, 2009 at 11:20 am and is filed under General. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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