Fed delivers another rate cut

As predicted, the Federal Reserve made its 2nd interest rate cut in a week, cutting rates by one-half percentage point. I believe this sends the right message to homeowners and businesses that the Fed is prepared to deal with the economy. The rate cut opens the flood gates for first time buyers, who are the first rung of the housing ladder.

Listing of the Week: Society Hill Towers

Society Hill Towers
200 Locust Street

Price: $299,900

Taxes: $173

Fees: $536

700 sq. ft.

one bedroom, one bath

upgraded open kitchen and bridge views

What do interest rate cuts mean for the housing market and mortgage rates?

As the Philadelphia Inquirer (and virtually every other news outlet) reported today, the Federal Reserve slashed two key interest rates by three-quarters of a percentage point, marking the biggest cut in nearly 24 years.

So what impact might that have on the housing market and mortgage rates?

I think that the Federal Reserve’s interest rate cuts are really a sign for what will happen in the mortgage market and they are sending the message to consumers that now is a good time to buy real estate. I think we may see rates go as low as 5%, which is a result of the Federal Government realizing that they raised rates too quickly, and they are now trying to correct their mistake. If the Fed continues to cut mortgage rates, we will see: a new wave of refinancing, a stimulation in the home buying market (especially first time home buyers), and people with ARMs being able to pay their mortgages because rates will stay low enough. All of these things are economic stimulators that have not been around in the recent months. I have already noticed an increase in serious buyers since the rates started dropping.

Ultimately, I believe that the rate drops will help the spring real estate market and people who continue to sit tight and not make a move are going to regret that they did so 60 days from now.

Listing of the Week: The Lanesborough

The Lanesborough

1601 Locust Street

Price: $2,995,000
Taxes: $441
Fees: $1,666

3 bedroom/1 den
3,446 sq. ft.

Own your own floor, total privacy in this boutique 18 home luxury condominium located at 16th and Locust. Luxurious brand new high floor three bedroom and den, 3,500 sq. ft. with customized features including state of the art kitchen and baths, marble entryway, hardwood floors and east, west, south and north views.

Mortgage rate cut the way to get the market back on track

Mortgage rates have come down to 5.5% for a 30 year fixed rate. Like I've said, the market topped out in June 2005--check the table, it shows this month in 2005 was the lowest mortgage rate--and for the last 31 months we have been in a correction. Now with rates dropping, the first time homebuyer will be able to afford to buy, which is the healthiest way for the market to get back on track. I think that this is a clear indication that we have bottomed.

Check out the homebuying ladder. If the first time homebuyer can't afford to buy, then the homeowner in the lowest price point has no one to sell to, and the entire ladder stalls. That is why it is so important for the first time homebuyer to be able to get onto the ladder.

When will the Housing Market Bottom?

A hot topic, yet no one can really predict when we will hit the bottom of the market. I appeared this morning on Good Day Philadelphia discussing this topic...

What does the 2008 Philadelphia real estate landscape look like?

Happy New Year! I like to think of each new year as a fresh start in some ways, but for the housing market, I think we are going to see a continuation of 2007. I think the market will continue to stagnate due to the overall housing crunch. Due to low values, there will be certain opportunities in the market which we will look back on in a few years and say were a great situation.

If you have to sell today you must be realistic and probably you are looking at the selling prices from 2004.

New construction inventory will gut the market to a degree and will create some opportunity for buyers where banks might step in and sell the remaining inventory at a discount. The reality is that the prime areas in the City--Rittenhouse Square, Washington Square and Society Hill--have very little available inventory, less than 2 percent. The problem is that there are very few buyers. But the good news is when and if the market turns, the recovery of existing Center City condos will be quick. There are reasons why there is little inventory in the best locations, these people do not have to sell. They either stay put or keep their property and rent it since it is in a prime location. As with beachfront property, the value of property furthest from the beach goes down first. The value of property farthest from the Square (Rittenhouse) is the one going down.