Fed Cuts rate 1.25 points but Mortgage Rates Rising (Seattle, Bremerton: low income, sales)

[Condorll]

Over the past 2 weeks the Fed cut the rate 1.25 points, yet Mortgage rates have risen .31 points in just the past week alone. The bottom is in as of last week on Mortgage rates. The expectation is for higher rates going forward.

If you are a potential homebuyer in the greater Seattle area, now would be a really good time to lock in a 30 year mortgage at a rate under 6%. If inflation rears it's ugly head going forward (and it will in my opinion) due to the low value of the US dollar, rates will continue this weeks uptrend.

See this article

Rates rise a bunch

[larrykcragun]

No one, not even you can predict the trend of rates. Give me a life.

[Condorll]

Originally Posted by larrykcragun

No one, not even you can predict the trend of rates. Give me a life.

You are correct.

However, one CAN say that rates are at absolute "Historical" lows and chances are with the low dollar and inflation creeping in (Fuel and Food prices for example) the dollar will be propped up at some point in the very near future by RAISING rates.

[70Ford]

One can also say that home prices may drop 10 percent in the next year. On a $400,000 dollar home, you will have paid $400,000 in February for something that is worth $360,000 a year later. Using the same logic as the original scenario, one could argue that if you DIDN'T buy a home now, you can save $40,000.Hrmm. That works out to $19.23 for 2080 hours (a standard work year). That's how much money.... one could lose...by buying right now. It's like losing a year of pay. WOW. A lot of option ARMS are due to reset, right around the corner. The market ain't going nowhere. As I posted in another thread...there are currently 50 percent more homes on the market in King county than there were at this time last year. There are not 50 percent more buyers who are willing to overpay for a home. Even realtors are saying that if your home doesn't sell by May....it most likely won't sell this year.

[Condorll]

Don't wanna argue with you 70 Ford, but if you are going to calculate like that, you need to add in a guranteed $15 grand for your rental and possibly a higher mortgage rate for the lifetime of your loan. Those 2 combined could exceed that possible downside risk of 40 grand by a good margin.

Prices have already come down substantially, and as one who is trying to sell I can tell you that there has been alot more activity in the past 3 weeks with arranged showings and attendence at Open houses, compared to Oct-Nov Dec of last year..

Betcha January's numbers shows an uptick in closings and February's will be a lot higher.

My 2 cents on what I am seeing and hearing.

[70Ford]

That's true.... If you stay 30 years. Who stays 30 years? You really have to do a cost analysis as to what is better for you and your life plans/goals. My god, I sound like a Realtor. (With A Capital R) Good points, CondorII. I guess we'll see......Good luck selling your home, too. As someone who has sold a home before, I'd daresay...it's stressful. I wish you the best.

[wsugrad03]

I've been told by people in the real estate business that now is the best time to buy. Of course, it's a good time to buy. It's always a good time to buy for them since their paycheck is directly proportional to the sales business.

Personally, I think now is the worst time to buy. If you currently own a home and want to refinance into a lower rate, good for you. Now is your opportunity. But for the rest of us looking to buy, I say wait another 6-12 months. Let's face it....most people aren't in the home owning business for 30 years. If you're young, you're likely to live in a home for 5-10 years and then upgrade to another home, or relocate to new city. We can't afford buying in an unstable economy when we're not planting roots for 30 years. Sure the tax shield of owning a home is great, but jumping in right now just seems too risky for most young families. The category of ready, willing, and able buyers in this market is much smaller than Realtors want you to think.

All trends show that prices are continuing to drop. The Case-Shiller Home Price Index shows that Seattle is behind the curve of the rest of the country, but indicates that Seattle is playing catch-up to the rest of the market. Home price growth is down and will probably dip into the red this year (5-10% seems likely).

The bottom line is buyers are protesting the Seattle market prices because prices are no longer reasonable. A family making $75K cannot afford a $460K mortgage. It just isn't remotely possible. You need more like $150K family income to make that happen. Sure we can lower interest rates to the point where a family earning minimum wage can buy a house. But, isn't that what got us in this mess to begin with? It's obvious that salaries are not going to catch up with the cost of living. Prices need to either go down or remain flat for the next 6 years to allow incomes to catch up.

I'm sick of hearing about Seattle's perfect little economy. Folks, it's not recession-proof. It doesn't matter what the Seattle economy is like. If you have a backlog of inventory and not enough buyers, prices are going to have to come down. It happened last year and it'll continue to happen this year.

However, the original premise that started this thread is true. If you have an ARM that's about to expire, refinance into a 30 year fixed!

[St.Croix to Seattle]

Originally Posted by wsugrad03

I've been told by people in the real estate business that now is the best time to buy. Of course, it's a good time to buy. It's always a good time to buy for them since their paycheck is directly proportional to the sales business.

You make a very good point,3 months ago I was sure Seattle area would miss the downturn completely thanks to the strong economy in the area,but we are about to buy this week or next in ALKI BEACH or EAST BREMERTON and the same money we intended on spending last year late summer gets us a lot closer to the Beach now,about 6 blocks closer for the same type property...that seems to me that prices are coming down as the streets we looked at today were only wishful think last year,but definately can be had on our budget today.....

[Condorll]

St.Croix to Seattle

Please check your personal mail on this website (top right corner)

Thanks

[irrational exuberance]

Originally Posted by Condorll

Over the past 2 weeks the Fed cut the rate 1.25 points, yet Mortgage rates have risen .31 points in just the past week alone. The bottom is in as of last week on Mortgage rates. The expectation is for higher rates going forward.

If you are a potential homebuyer in the greater Seattle area, now would be a really good time to lock in a 30 year mortgage at a rate under 6%. If inflation rears it's ugly head going forward (and it will in my opinion) due to the low value of the US dollar, rates will continue this weeks uptrend.

See this article

Rates rise a bunch

The 30 year rates are rising because the fed fund rate cut was to bail banks out and to help banks bail each other out. Someone said you cant predict rate movements but anyone who has a good understanding of monetary policy knows you can predict what the fed will do next. The Fed is in a catch 22. Inflation is really high but banks are getting drug down because of thousands of defaulting loans. So its either sit back an watch the economy spin the economy into an all out recession or try to boost consumer and investor confidence while bailing banks out at a cheaper rate. I suspect that is why many like myself believe rate cuts wont stop the recession we are in currently and it will continue to get worse. If you read bloomberg or business week the fed has already acknowledged that inflation is far more important than the credit crisis so they will start to consider raising interest rates to hedge inflation when the economy "recovers" but seeing the trend things wont recover anytime soon. Everyone is over extended in debt while inflation increases making everyone essentially get pay cuts while things are getting more expensive. We are in for a bumpy ride