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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$1,520,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,520,000
Open House
MLS# PV18063653

106 Coronel Plaza
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,499,000 - 5Br/4Ba -  for Sale in Rolling Hills Estates
$1,499,000
Open House
New
MLS# SB18088147

3448 Tanglewood
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,495,000 - 2Br/2Ba -  for Sale in Rancho Palos Verdes
$1,495,000
Open House
MLS# PV18037874

4111 Sea Horse Lane
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,495,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,495,000
MLS# SR18063020

2521 Colt Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,488,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,488,000
MLS# SB18080340

2618 Sunnyside Ridge Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,465,000 - 3Br/2Ba -  for Sale in Rolling Hills Estates
$1,465,000
Open House
MLS# PV18078169

2220 Potrillo Rd
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,450,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,450,000
Open House
MLS# SB18081144

3205 Palos Verdes Drive N
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,370,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,370,000
MLS# TR18067910

5068 Delacroix Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,369,000 - 4Br/4Ba -  for Sale in Rancho Palos Verdes
$1,369,000
MLS# PV17248077

4333 Via Frascati
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,350,000 - 5Br/3Ba -  for Sale in Rancho Palos Verdes
$1,350,000
MLS# PV18044226

2259 Rue Le Charlene
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,350,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,350,000
Open House
New
MLS# SB18092180

5926 Flambeau Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,349,000 - 3Br/3Ba -  for Sale in Rancho Palos Verdes
$1,349,000
MLS# SB18075318

26404 Birchfield Avenue
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,348,320 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,348,320
New
MLS# IV18084967

26626 Honey Creek Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,309,950 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,309,950
MLS# SB18044268

27503 Elmbridge Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,300,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,300,000
MLS# DW18052841

6208 Lochvale Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,299,999 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,299,999
MLS# PV18016163

4869 Browndeer Lane
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,299,000 - 5Br/3Ba -  for Sale in Rolling Hills Estates
$1,299,000
MLS# SB18057774

4633 Browndeer Lane
Rolling Hills Estates, CA 90275

Property Type: Single Family Residence
$1,298,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,298,000
MLS# PV18058180

27539 Longhill Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,275,000 - 3Br/2Ba -  for Sale in Rancho Palos Verdes
$1,275,000
MLS# SB18080827

28021 Lomo Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,264,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,264,000
MLS# PV18011378

28704 Golden Meadow Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence

 

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