Maureen Megowan's Blog

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Why Good Economic News may be bad for Real Estate

Most real estate agents assume that good economic news will help the real estate market. In some respects, it will, as buyers become more confident in the economy and their job security and move from the side lines and actively look at buying property. One significant impact that an improving economy will have,however, especially when the Federal Reserve decides that they no longer need to keep interest rates low to stimulate the economy,  is that mortgage interest rates are bound to increase. As interest rates increase, the ability of buyers to qualify for mortgages and to afford the increased payments will inevitably lead to a slow down in purchases as well as pressure on the sales prices of homes.

This paradoxically is the "catch 22" of an improving economy.

For more information about Palos Verdes and South Bay Real Estate and buying and selling a home on the Palos Verdes Peninsula, visit my website at http://www.maureenmegowan.com . I try to make this the best real estate web blog in the South Bay Los Angeles and the Palos Verdes Peninsula. I would love to hear your comments or suggestions.

Comment balloon 1 commentMaureen Megowan • January 30 2013 10:03PM

Comments

Great post Maureen. I am with you on this. The fed promised to keep the interest rates low for a while, but it could go up anytime especially when they think consumer no longer need to be enticed with low rates.
Posted by Wika Hutchinson, Broker, CRIS, SFR, CDPE over 5 years ago

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