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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$1,519,000 - 4Br/2Ba -  for Sale in Palos Verdes Estates
$1,519,000
MLS# PV17260465

2840 W Palos Verdes Drive W
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,515,000 - 3Br/3Ba -  for Sale in Not Applicable-169, Rancho Palos Verdes
$1,515,000
MLS# 318000343

6518 Sandy Point Court
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,499,000 - 4Br/4Ba -  for Sale in Rancho Palos Verdes
$1,499,000
MLS# PW17268289

61 Rockinghorse Road
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# PV18017774

28208 Palos Verdes Drive E
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,450,000 - 4Br/2Ba -  for Sale in Palos Verdes Estates
$1,450,000
New
MLS# PV18033903

2845 Via De La Guerra
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,425,000 - 4Br/2Ba -  for Sale in Palos Verdes Estates
$1,425,000
MLS# SB17240464

2649 Via Pacheco
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,400,000 - 4Br/4Ba -  for Sale in Palos Verdes Estates
$1,400,000
MLS# PV17230771

3808 Palos Verdes Drive N
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,399,999 - 4Br/4Ba -  for Sale in Rancho Palos Verdes
$1,399,999
MLS# PV17248077

4333 Via Frascati
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,399,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,399,000
MLS# TR17219965

5068 Delacroix Road
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,399,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,399,000
Open House
MLS# PV18016163

4869 Browndeer Lane
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,399,000 - 4Br/3Ba -  for Sale in Palos Verdes Estates
$1,399,000
MLS# SB18027139

2917 Palos Verdes Drive N
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,375,000 - 3Br/3Ba -  for Sale in Rolling Hills Estates
$1,375,000
New
MLS# PV18032921

23 Santa Bella Road
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,375,000 - 3Br/3Ba -  for Sale in Rolling Hills Estates
$1,375,000
MLS# SB18031373

9 Pepper Tree Lane
Rolling Hills Estates, CA 90274

Property Type: Single Family Residence
$1,368,000 - 3Br/2Ba -  for Sale in Rancho Palos Verdes
$1,368,000
MLS# SB18013703

27524 Longhill Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,350,000 - 5Br/4Ba -  for Sale in Rancho Palos Verdes
$1,350,000
MLS# PV18015980

5682 Mistridge Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,350,000 - 2Br/2Ba -  for Sale in Rancho Palos Verdes
$1,350,000
MLS# SB18025145

6529 Via Siena
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,345,000 - 3Br/2Ba -  for Sale in Palos Verdes Estates
$1,345,000
MLS# SB18029244

1105 Via Coronel
Palos Verdes Estates, CA 90274

Property Type: Single Family Residence
$1,300,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,300,000
MLS# PW18025160

5505 Eau Claire Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,299,000 - 4Br/2Ba -  for Sale in Rancho Palos Verdes
$1,299,000
MLS# PV17210323

5527 Shoreview Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence
$1,298,000 - 4Br/3Ba -  for Sale in Rancho Palos Verdes
$1,298,000
MLS# SB17111402

5672 Sunmist Drive
Rancho Palos Verdes, CA 90275

Property Type: Single Family Residence

 


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