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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$1,535,000 - 5Br/3Ba -  for Sale in Rancho Palos Verdes
$1,535,000
MLS# 18339862

29111 Golden Meadow Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,530,000 - 5Br/4Ba -  for Sale in Rancho Palos Verdes
$1,530,000
MLS# SB17219983

1808 Velez Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,520,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,520,000
MLS# PV18063653

106 Coronel Plaza
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,499,000 - 3Br/3Ba -  for Sale in Rolling Hills Estates
$1,499,000
MLS# PV18129241

12 Hillcrest Meadows
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,499,000 - 4Br/2Ba -  for Sale in Rolling Hills Estates
$1,499,000
MLS# PV18132078

5041 Willow Wood Road
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,499,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,499,000
New
MLS# SB18132266

5311 Manitowac Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,498,000 - 5Br/4Ba -  for Sale in Rancho Palos Verdes
$1,498,000
Open House
New
MLS# WS18143856

5682 Mistridge Dr
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,450,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,450,000
MLS# OC18126972

30154 Rhone Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,450,000 - 3Br/2Ba -  for Sale in Rancho Palos Verdes
$1,450,000
New
MLS# PV18134062

26703 Honey Creek Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,449,000 - 3Br/3Ba -  for Sale in Rancho Palos Verdes
$1,449,000
New
MLS# PV18137580

26803 Basswood Avenue
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,438,000 - 4Br/4Ba -  for Sale in Rancho Palos Verdes
$1,438,000
MLS# PV18112854

6508 Nancy Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,425,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,425,000
MLS# PV18097615

28043 Braidwood Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,399,999 - 3Br/3Ba -  for Sale in Rancho Palos Verdes
$1,399,999
MLS# 18350664

5044 Blackhorse Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,398,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,398,000
MLS# SB18130357

2332 Chelsea Road
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,395,000 - 3Br/2Ba -  for Sale in Rancho Palos Verdes
$1,395,000
MLS# PV18096826

4 Surrey Lane
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,390,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,390,000
New
MLS# SB18128060

7015 Starstone Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,375,000 - 2Br/2Ba -  for Sale in Palos Verdes Estates
$1,375,000
MLS# PV18109217

3112 Palos Verdes Dr. N.
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,365,000 - 3Br/3Ba -  for Sale in Rancho Palos Verdes
$1,365,000
MLS# SB18082647

6704 Via Canada
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,365,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,365,000
New
MLS# PV18140318

28620 Covecrest Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,350,000 - 4Br/3Ba -  for Sale in Palos Verdes Estates
$1,350,000
MLS# PV18122995

1433 Via Cataluna
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence

 

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