Rates Up Again; Is Good News Bad News or Good News? (It’s Both); Historic Rates
“When the trough gets smaller, the pigs get meaner.” This is a Dan Sullivan quote Heejin and I both love, and it is a great reminder for us all when markets contract. We’re not getting “meaner” at JVM, but we’re certainly getting more competitive. And we love the competition.
Rates shot up again today in the face of more “good news” in the form of very strong employment numbers. Rates went up yesterday after investors decided that Mr. Trump may be able to deliver on policies that boost economic growth.
As we explain often, good economic news moves investors out of bonds and into stocks, usually resulting in rate increases. Hence, in the short run good economic news is bad news for real estate, as financing becomes more expensive.
But, in the long run, good news is good news. This is b/c a growing economy and lower unemployment creates more qualified buyers, more demand for housing, and more mobility, as employment needs move people to and from different locales.
Lastly, even if rates shoot up another 1%, they will still be amazingly, stunningly, incredibly low. Please see the above chart we use in our Homebuyer Seminars. It shows 30 year rates from 1970 to the present. Even 6% rates will still be a gift.
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