Friday, 09/03/2010
Market Update
Week of July 26 - August 01:
48 New Listings
49 Active Foreclosures
55 Price Reductions *
15 Sold **
* Price Change Facts: Average list prices on "Active Only Listings" are running at 91% of original price after 162 days on the market.
** Sold Property Facts: Average sales price is 96% of list price. Average days on the market were 124.
Stats shown include Downtown Dallas, Uptown, Victory Park and Oak Lawn.
Read more about current Dallas Real Estate Market Activity.
2010
Annual School Report
This Annual School Report is provided by my friends at Republic Title
WR Starkey Mortgage News
This week the BUZZ is all about ‘deflation.’ Will it come? What will happen? While the directors at the Fed agree that the economy will remain weak for a while, they are split on the deflation issue. This week, the core CPI came in positive but just barely, underscoring why there’s disagreement. So, what does this mean for rates?
View rates like a set of stairs: In lending money, the more risk you take (horizontally), the higher rate of return you want (vertically). Risk equates to how soon you’ll be paid back and who you lend to. The longer you wait to get your money back, the more risk you take – therefore, you want a higher interest rate. For example, a 10 note pays a higher rate than a 1 year note. Also, the risker the creditor, the higher rate of return you demand. So a mortgage to you and me requires a higher rate than Uncle Sam’s T-bills. Following so far?
Back to the stairs: Each step represents a different level of risk, either time lent or borrower lent to. The1 yr. T-bills are at the bottom, 10 year notes are in the middle, and 30 year mortgages are at the top. Well, the 1 year T-Bills are basically at 0….so they can’t go any lower. And if THEY can’t go any lower, can any of the other steps on the interest-rate-stair-case (i.e. mortgages) go any lower? Not really. The only way for mortgages (the top steps) to drift lower would be for the size of the steps to shrink – i.e. investors would have to be willing to take less return for their added risk. This might happen to some degree, but not much.
But what IF, investors WERE willing to take less for their added risk and those steps DID shrink, thereby lowering rates further? Well, a funny thing happens to a monthly payment when rates are this low. The difference between a 4.0% payment and a 4.25% payment is less than the difference between a 5% and 5.25%. My point? IF rates DID drift lower, which in my opinion is not likely, it wouldn’t impact your borrower as much as it did when rates were in the 5’s.
So, when your clients ask, “Shouldn’t I wait for rates to go lower?” Now you can explain and tell them adamantly “NO!”.
This week 30 yr. fixed rates remained between 4.25% and 4.5% depending on program, credit and points (notice how we’ve been here for about 4 weeks?). Have a great weekend and have your buyers call us so we can get them approved to buy.
This update is provided by my friends at WR Starkey Mortgage. Contact Susan Moore with WR Starkey for your loan approval and call or email me to help you find and close the sale on your new home.
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