November 2016 Market Report

November was a doozy of a month! From an election that’ll go down in history, to the stock market getting a little boost, to the fed finally pulling the trigger on rate increases, the state of home buying and selling has become a bit unpredictable…unless you have expert info at your fingertips!

hows-the-market-1

November was a doozy of a month! From an election that’ll go down in history, to the stock market getting a little boost, to the fed finally pulling the trigger on rate increases, the state of home buying and selling has become a bit unpredictable…unless you have expert info at your fingertips!

Take, for example, increases to interest rates. This is scary, no? Sure, no one wants to buy when rates are high and rate increases mean rates are now high, right? NOPE! Here’s a little history lesson to put things in perspective.

Rates started being tracked by the government in 1971 and the average mortgage interest rate for that year was 7.5%. Rates hovered around there for a decade or so, but thanks to the mid-70’s oil crisis and other economic factors, inflation went NUTS in the early 80’s. In a mad dash to minimize the damage, the fed went crazy and jacked rates up higher than we have ever seen in history. This led to mortgage rates as high as 18% (and higher in Canada) during the entire decade of the 8o’s!

When the decade turned, rates were much more manageable at around 10%, so people got pretty comfortable again. The market bounced back, credit was getting cheap, and those baby boomers who survived the financial misery of the previous few years, found themselves ready to buy buy buy again. And buy they did. The next 15 years BOOMED! I mean really boomed. Thanks to rising wages, falling unemployment, and cheap rates everyone and their uncle could suddenly afford to buy houses, cars, fancy toys, vacations, etc. The 90’s saw interest rates of around 7.5%-9%. Darn cheap, comparatively speaking.

Then the bankers went and got too greedy. Remember that fuzzy term “mortgage back securities”? Well, I’m not going into that here, but just know that it stood for greedy investment bankers ruining it for everybody. The next thing we know…wham bam, thank you ma’am…another recession. THE GREAT RECESSION! Housing values plummeted, huge corporate entities failed, got bailed out, failed, got bailed out, failed again. People who refinanced their homes to pay off all those cars, vacations, and toys that were so easy to buy due to cheap credit suddenly found themselves underwater on their mortgages and totally insolvent. Foreclosures happened. Bankruptcies happened. Jobs started disappearing as business folded. Unemployment was sky high with no view of the ground floor.

The fed had NO CHOICE! No choice, I tell you. They dropped rates so low, so fast, lenders may as well have been paying dividends on credit instead of receiving interest. The exact opposite of the action taken in the 80’s. This was imperative in order to stimulate the economy and get things back on track for healing the nation. And there you have it. Credit was basically free as the millennials came of age. An entire generation has never even seen mortgage rates over 3.5%, but that is not normal, people. NOT NORMAL!

So, you tell me? Is 4.175% really too high for a 30 year fixed mortgage??? I think not.

It’s still a great time to buy and an even better time to sell. Don’t even think twice about it. No one is being gouged by rates at the moment, I promise.

Cheers, my friends.

Erica

 

Author: ericamaranianrealtor

My name is Erica Maranian and I am a Realtor at FresYes Realty. As a kid growing up in the Central Valley, I dreamt of someday seeing the world. I came to realize that the world had been in my backyard the entire time. Fresno is a short drive from some of the most majestic landmarks in the entire nation. We feed the world with our fertile land. Our culture is diverse. Our city is historic. Our people are friendly. I’m in the business of helping people. My prior experience as a banker, manager, underwriter, and analyst allowed me to develop expertise in being a good listener, uncovering needs and priorities, and seeing what is possible given the available financial resources. As a Realtor, I want to help you in your journey of buying or selling a home in the Central Valley. I attended California State University, Fresno (Go ‘Dogs!) and earned a Bachelor of Business Administration degree. I went on to earn an M.B.A. graduate degree, with honors, from Colorado State University’s prestigious graduate school of business…right from the comfort of my Fresno home. My passions include photography, contemporary literature, music, exploring the outdoors, and living a healthy lifestyle. I currently live in Clovis with my husband, Chris, and our two sons, Nickolas and Alexander. As a family, we live, play, and work right here in the Central Valley. My family and my heart are strongly rooted Fresno County. I would love to help you find a corner of this awesome place to call your own.