Interest Rates Palos Verdes Homes and the Fed

Interest Rates Palos Verdes Homes

For a long time now buyers and sellers have benefitted by a real estate market which was fueled by some of the lowest mortgage rates in our life time.

Why were interest rates so low?  In large part the reason is simple, the Federal Reserve seeking to stimulate the collapsed economy following the debacle of horrible loan practices and of course other factors, lowered the federal fund rates.

But the days of sub 4% rates may soon disappear.  The Federal Reserve, according to a trade journal article I read today, decided to raise the federal fund rates later this year.  That would be the first bump in rates in almost 10 years.

interest rates palos verdes homes“When the Fed raises short-term interest rates, they’re raising the cost of money, and that impacts the cost of money to consumers, businesses and governments alike,” said Greg McBride, chief financial analyst at Bankrate.com.

Fed Chairwoman Janet L. Yellen said last month that she anticipated the central bank would move slowly on future interest rate boosts once it enacts the first small one — expected to be a 0.25 percentage point increase. That means it will be “several years,” she said, before the rate gets back to a more normal 3.5% to 4% level.

Now let’s put this in perspective before everyone starts screaming that the sky is falling.

ONE – the reason why the Fed would raise the Fed Funds rate is to get a bit ahead of inflation, so that’s a good thing

TWO – the economy is getting better.  That means MORE JOBS and that means a stronger real estate market.

THREE – having served my clients over these last 35 years has given me the perspective to know that even when interest rates were at 8% and higher, prices appreciated for Palos Verdes homes and South Bay real estate.  Why?  Because the economy sustained that price appreciation nothwithstanding higher rates.

I don’t anticipate the appreciation rates of the last 24 months to duplicate in the next 24 months, but I do still anticipate positive appreciation.

Still, all we know for sure is what is happening now.  And for now, interest rates are great, so “now” may be an ideal time for buyers to buy and sellers to sell.

Interest Rates Palos Verdes Homes
In the last 6 months, the median sale price of a home in Palos Verdes was $1,399,000. With most buyers coming in with down payments of around 40%, what would that do to mortgage payments if interest rates were to bump up by a 1/4%?  If you had stellar perfect credit (FICO above 800) and extremely low debt/income ratios, you’d probably be able to get an interest rate around 3.625% today.  That would be a payment of principle and interest of around $3,828/mo.  If that same loan product were a 1/4% higher, your payment would be $3,947/mo.  Would $119/mo dissuade you from buying the house you really want?

What does YOUR crystal ball say about where interest rates will be in a year?

Palos Verdes Homes within 10% of the median sale price (effective 7/7/2015) of $1,399,000

* Separate multiple values with comma.

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$1,529,000 - 4Br/3Ba -  for Sale in Palos Verdes Peninsula
$1,529,000
MLS# PV17138077

4114 Rousseau Lane
Palos Verdes Peninsula, CA 90274

Property Type: Single Family Residence
$1,499,999 - 5Br/4Ba -  for Sale in Rancho Palos Verdes
$1,499,999
Open House
MLS# PV17153077

3602 Greve Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,499,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,499,000
MLS# PV17122659

30338 Via Borica
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,499,000 - 5Br/3Ba -  for Sale in Rancho Palos Verdes
$1,499,000
MLS# PV17135694

27902 Longhill Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,499,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,499,000
MLS# SB17126218

1036 Via Nogales
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,495,000 - 5Br/3Ba -  for Sale in Palos Verdes Estates
$1,495,000
MLS# SB17147576

2640 Via Olivera
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,489,000 - 5Br/4Ba -  for Sale in Rancho Palos Verdes
$1,489,000
Open House
New
MLS# SB17168897

6745 Birchman Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,488,000 - 3Br/3Ba -  for Sale in Rolling Hills Estates
$1,488,000
MLS# PV17148174

27705 Conestoga Drive
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,479,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,479,000
New
MLS# SB17162762

3833 Palos Verdes Drive N
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,479,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,479,000
MLS# WS17119823

2457 Rue Le Charlene
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,475,000 - 4Br/3Ba -  for Sale in Palos Verdes Peninsula
$1,475,000
MLS# 17243812

27515 Rainbow Ridge Road
Palos Verdes Peninsula, CA 90274

Property Type: Single Family Residence
$1,450,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,450,000
Open House
New
MLS# PV17168509

5048 Silver Arrow Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,450,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,450,000
MLS# SB17118731

5677 Mistridge Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,450,000 - 5Br/3Ba -  for Sale in Rancho Palos Verdes
$1,450,000
MLS# SB17147690

6948 Verde Ridge Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,449,000 - 4Br/2Ba -  for Sale in Palos Verdes Estates
$1,449,000
Open House
MLS# PV17135558

4204 Via Nivel
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,440,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,440,000
MLS# SB17093547

3329 Palos Verdes Drive N
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,425,000 - 4Br/4Ba -  for Sale in Rolling Hills Estates
$1,425,000
MLS# PV17023554

33 Hillcrest Meadows
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,425,000 - 4Br/4Ba -  for Sale in Rancho Palos Verdes
$1,425,000
MLS# PV17118498

4333 Via Frascati
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,425,000 - 3Br/2Ba -  for Sale in Rolling Hills Estates
$1,425,000
Open House
New
MLS# SB17163968

36 Encanto Drive
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,400,000 - 5Br/3Ba -  for Sale in Rancho Palos Verdes
$1,400,000
MLS# SB17149918

2326 Rue Le Charlene
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence

 


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