Edmonds Real Estate Corner
Hey don’t invest in real estate now! Why you might save money later if you wait until rates go up not! Just when you thought it couldn’t get any better to own a home in Edmonds it did. Your better off now than this time last year to purchase a home in Edmonds Wash town by the sound the average cost for a home in this bedroom community as of last month was $349,000 that’s a first time buyer price. Rates are going to go up according to economist.
The first reason is that the markets are currently in a very positive mood about the near-term future of the economy. Manufacturing seems to be turning up along with employment numbers and consumer confidence. Personal income is growing slightly. The numbers continue to please investors, and the stock market has finally gotten into the spirit of the higher numbers again.
A better future for the stock market and the overall economy generally means that interest rates begin to rise, as the stimulus of lower rates gives way to the foot-gently-on-the-brakes of higher rates. Though analysts assure us daily that inflation won’t begin a serious rise for many months, there is still a consensus that an improving economy will cause the Federal Reserve to cease its support of lower interest rates, and perhaps even raise the fed funds rate well before it was recently expected to.
The second reason that 10-year note rates are rising so convincingly is closely related to the first. As interest rates climb, existing Treasury notes providing lower yields to their investors become less valuable. Those investors, therefore, very often raise rates further by selling off their Treasury securities when they become convinced that the interest rate trend is turning and that their holdings are about to lose value.
We have noted a narrowing spread between the 10-year note and the 30-year average mortgage rate, suggesting that mortgage rates may be about to rise. Even more significant is the spread between 2-year notes and 10-year notes, which makes up what is called the “yield curve.” A year ago, that spread was 1.27%. Now, though, the spread has widened very significantly to 2.81%. (Before the recession, the yield inverted rather prophetically, with short-term rates lower than long-term rates, a condition that sometimes precedes an economic downturn.) So as I said wait before you purchase it could cost you not!! The Cobbin Group /Keller Williams Realty google it and will decode it!
