by Angie Hall.
Windermere Real Estate & Belle Residence
Can you believe it is Fall? Â What a gorgeous summer we enjoyed, and it showcased why we love our Gem of the Sound so much! Real estate has proven to be its usual ever-changing self. Â We saw the typical end of summer “lull” while we all got out and enjoyed those final days of Summer celebrations. Â The last couple of weeks, however, have really taken off.
It’s super-interesting to see in our local market that properties in the $800K—$1.3M range are hot, hot, hot again. Multiple offers are returning to many of these homes, and slight escalations are happening again (nothing like 2021-2022, but well-priced and presented homes are very popular). The $1.3M+ market, though, is seeing longer days on the market, and we just can’t express enough the importance of pricing competitively vs. testing the market at a higher price.
In the news, we have all heard of the recent Fed rate cuts, but mortgage rates have actually ticked up. Â To help explain what this means for the housing market, we reached out to Eric Aasness at CMG Home Loans.
Here is Eric’s analysis:
“The Federal Reserve’s Open Market Committee (FOMC) met Wednesday and cut rates half a percent, more than the expected .25% cut. After the cut, mortgage rates went up! Why?
“First, let’s clarify what the Federal Reserve just cut. They cut the Federal Funds Rate, not mortgage rates, and mortgage rates do not move one-to-one with the Fed Funds rate. What is the Federal Funds rate? It is the target interest rate at which commercial banks borrow and lend their excess reserves to each other overnight. The Fed Funds rate is an extremely short-term loan of less than 24 hours. In contrast, mortgages are long-term. The bond market drives mortgage rates, and the bond market is driven primarily by a fear of inflation. The FOMC meets only 8 times yearly, but bonds trade daily, hourly, and sometimes by the minute. Traders don’t wait for the FOMC meeting to move the market. They have been anticipating and trading on a Fed cut for weeks. So why did rates go up after the cut?
“Many bond traders believe the cut was too much at this time. Inflation has not yet dropped to the Fed’s 2% goal, and a significant rate cut is a stimulant to the economy. It’s inflationary. But other traders are looking carefully at the Fed’s “Dot Plot”, which is a survey of voting Fed members on their expectations for future rate cuts. In it, 7 members believe an additional .25% cut this year is appropriate, 9 members think a .5% cut is needed, two members believe 0% is the right move, and one thinks .75% is needed. Because the Dot Plot yields no clear picture of the Fed’s next move, bond traders got nervous, pushing rates higher.“
Wishing you all a hopeful, sun-filled Fall! Hope to see you out shopping locally!!
Angie Hall
Windermere Real Estate & Belle Residence
206-271-9417
angieh.withwre.com
