The latest news on our economy and our capital markets is almost scary: the Dow Industrials are down another 300 points, Merrill Lynch posted its worst quarter in history, recessionary predictions from Goldman Sachs are now reiterated by Credit Suisse, mid-Atlantic factory activity has slowed, etc., etc. Yet, as I read these headlines, I am having difficulty keeping up with taking and returning phone calls from area buyers and existing homeowners. In fact, as of last Friday we closed more business this month than we closed all of December.
So how is it that bad news nationally is good news locally? The following are the benefits:
1. lower interest rates make it more affordable for buyers to buy homes and investors to invest in homes,
2. Investment in the stock market is less attractive right now and real estate, especially local real estate, is providing a good alternative with some good values available,
3. congress will be motivated to provide additional tax incentives to stimulate the economy,
4. a cheap dollar means that more foreign investment is headed our way,
5. vacationing to Hawaii is more attractive financially than vacationing in Europe– OK so maybe this doesn’t help the Bay Area, but at least I know that I’ll be reinvesting in the US versus elsewhere when I vacation this year!
Because low interest rates a strong local economy and some good housing values have greatly increased demand, I am very bullish on the Spring and Summer real estate market. For now, many buyers want to take advantage of the market before activity really picks up in the Spring; for existing homeowners with 5-year fixed mortgages, they are looking to refinance those mortgages into either a fixed program or another “hybrid” ARM (an adjustable-rate mortgage that has a fixed term less than the total term of the mortgage). Hence, this explains why the phones are very busy again and why we all may have something to smile about despite the national headlines.
Thank you for reading, and if you have a chance, drop by my website: www.AbsoluteMortgage.com
