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I've gotten a lot of questions lately about what interest rates will do in 2013. People want to know if the government will keep rates low. It really depends. What happening with the economy, the unemployment rate, how bonds are being sold and purchased on the market, home sales prices, how long homes are on the market, and consumer confidence all go into the equation. As you can see, there are a lot of moving pieces.
Another factor we look at is jobless claims. Although jobless claims were down, we should wait until March to analyze this number because it could be skewed due to companies hiring for the holidays. We really can’t get a feel for where the unemployment rate is until spring.
The real estate market; however, is ticking back up. From 2011 to 2012, the average home sale price is up 11.5%. This is a big number. Of course, different pieces factored into this increase with investors coming in to buy foreclosures, distressed properties and short sales. Since there was more demand for rentals, the cost of rent went up. An investor can buy a rental for $150,000 and rent it for $1,800 a month. Beyond investors, first- and second-time home buyers also came into play to increase home sales, so the bottom line is consumer confidence in the market is up.
We had this type of confidence in the market in 2009 due to the homebuyer tax credit but we no longer have this incentive. Now we have a different incentive—record-low interest rates. It’s definitely time to take advantage of the low interest rates whether it’s to refinance or purchase a new home because we don’t know how long they’ll be as low as they are.
Don’t miss my next blog when I’ll introduce you to a product you can take advantage of to get you into your first or next property.
If you have any questions, please contact me at jmoderski@gatewayfunding.com or 215.591.0222 x1630. I’d be happy to assist.
