Real Estate Forcast

     

    Federal Reserve Chairman Ben Bernanke delivered remarks Wednesday in Washington, at his final planned news conference before he steps down.

    Chairman Bernanke made it clear that the Fed’s easy money policy would continue beyond the previously indicated threshold of 6.5 percent unemployment. He also announced that that rates would not increase until 2015 at the earliest – a consensus among the committee’s voting members.

    What does this decision mean for you?

    Because of the Fed’s purchase of mortgage-backed securities it’s likely that mortgage rates will continue to rise, though it may not be a dramatic increase given the modest reduction in the purchase of these assets. Nevertheless, sellers who need to move to a new school district or into a larger home should consider listing sooner. And buyers who are on the fence would be wise to whittle down their list and make an offer, especially those who want to purchase in areas where prices are spiking.

    The decision could also encourage cash-rich onlookers to come out and buy – at least those who can afford it. Several industry experts from the Nation Assocaiton of REALTORS and RealtyTrac were quoted in an article on Market Watch, stating their belief that despite the motivation, these cash-only deals are unsustainable in the long-term.

    Overall, the Feds increased clarity coupled with the expectation of continued monetary accommodation and low, short-term interest rates should keep the economy growing. This was well-illustrated last few weeks when markets responded favorably putting the Dow Jones up nearly 300 points (1.8 percent).

    KW Research Department

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