Monday, November 23, 2009

What will happen to Interest Rates?

If you are thinking about real estate investments as an alternative strategy, remember that interest rates begin to rise as a way to curb inflation. The key is to know when interest rates may start to trend upward. March 2010 seems to be a key date when the Fed decides to stop buying mortgage securities and if private investors do not pick up the slack - the result will be higher interest rates. Expect over 6%. Which by the way is still a low interest rate but the increase reduces how much you may qualify for a home mortgage. According to the National Association of Realtors:

Nov 20, 2009 Interest Rate @ 5.15% Median Home Price $174,900

March 2010 Interest Rate @ 6.00% Median Home Price $159,250

So in four short months while we are waiting for the Super Bowl after the holidays, our ability to buy a higher priced home disappears. To invest in real estate, remember the "perfect good storm" - low interest rates, depressed home prices, and willing sellers due to an over supply.

Foreclosures, short sales and low priced homes with LAND should be your target market.

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