Low Rates Help The Economy

Volume 14 Issue 9 September 2020

T

here have been plenty of

negative head-

lines this year -

COVID-19,

recession, civil unrest and

more. The one constant

positive throughout the

majority of 2020 has been

the lowest interest rates

in history. These historic

low rates continue to

support the recovery from this

COVID-induced recession. The benefi-

cial effects of low rates can be seen in

several sectors of the economy.

For one, it is unlikely the stock market

would have rebounded so quickly with-

out the influence of low interest rates.

While low rates make

it more affordable to

borrow, they are a disin-

centive against putting

money in the bank.

Stocks become more

attractive as an invest-

ment vehicle when

individuals and institu-

tional investors cannot

make returns in other sectors.

In turn, a rising stock market gives

consumers confidence regarding the

future of the economy and confidence

is a key component of any economic

recovery.

In This Issue P2 Buying Power Soars || P2 Your First Home? The Right Realtor is the Key

P3 Low Rates Help The Economy || P4 Homeownership Rate Rises

Selected Interest Rates August 27, 2020

30 Year Mortgages——–2.91%

2019 High (Jan 3 %

2019 Low (Sept 5)———3.49%

15 Year Mortgages——-2.46%

5/1 Hybrid ARMs——–—–2.91%

10 Year Treasuries—–—–0.73%

Sources—Fed Reserve, Freddie Mac

Note: Average rates do not include fees and points. Information is provided for indicating trends only and should not be used for comparison purposes.

Continued on Page 3

THIS NEWSLETTER IS BROUGHT TO YOU BY:

Did You Know…

Redfin said nearly half (45%) of people who bought a home in the past year made an offer on a prop-erty that they hadn’t seen in per-son, the highest share since at least 2015. The report said this compared to just 28% during the same period last year, and 20% in July 2015, when Redfin posed this question for the first time. Redfin agents cited health concerns around the coronavirus pandemic, accelerating migration trends and competition fueled by a worsening housing shortage as reasons more buyers are bidding on homes be-fore visiting them. “Sight-unseen offers will likely continue to climb in the coming months,” said Red-fin Chief Economist Daryl Fair-weather.

The Right Realtor...

Page Two

“…there are

many reasons not to go

it alone…”

Buying Power Soars M

any first-time buyers think that getting the best deal is easy. Nothing could be fur-

ther from the truth. With foreclosures, short-sales and some homeowners not understanding the true val-ue of their home, the choic-es are numerous but as con-fusing as ever. More than ever a buyer needs a profes-sional real estate agent to guide them through the process from shopping to contract presentation to settlement. There are many reasons not to go it alone–

The purchase of real estate represents the most important purchase a person makes in a lifetime. A purchase cost-ing hundreds of thousands of dollars is not simple–it is complex. There are a multitude of things which can go wrong. With a Realtor leading you, there is a greater chance that your im-portant purchase will be successful rather than winding up being arbitrated in a court of law!

The purchase of a home can be a very stressful experience. Face it– many of us get stressed when we spend a few hundred dollars on clothes. Yes, buying a home should be a wonderful experi-ence. But anytime you spend thousands

upon thousands of dollars, there is bound to be some stress. Trying to pur-chase real estate without assistance just

adds to the stress.

Are you making the right decisions? Is there a better way? A Realtor has the experience to let you know for sure.

You really don’t have the time. One point which really is true of the vast majority of today’s consumers is that they don’t have enough time. Each year we are introduced to more and more time saving instruments. Smart phones, tablets and more. And each year we have less and less time. Selling and purchasing a home is a very time-consuming process–if you would like it accomplished most successfully. A Realtor is there to save you time.

How does a Realtor save you time? In a multitude of ways. Did you know how many vendors must be selected for a home sale and purchase? Here are a few:

• Moving Company

• Insurance agent

• Mortgage loan officer

• Pest control company

• Appraiser

B

lack Knight reported

that record-breaking

low interest rates con-

tributed to creating

the most affordable average-

priced homes since 2016. Buying

power for homebuyers increased

10% from last year, Black

Knight noted, adding that shop-

pers can now afford roughly

$32,000 more home than one

year earlier while keeping their

monthly payment the same.

“As of mid-July, it required

19.8% of the median monthly

income to make the payment on

the average-priced home pur-

chase, assuming a 20% down

payment and a 30-year loan,”

said Black Knight Data & Ana-

lytics President Ben Graboske.

“That was more than 5% below

the average of 25% from 1995-

2003.

This means it currently requires a

$1,071 monthly payment to pur-

chase the average-priced home,

which is down 6% from the same

time last year, Graboske added

that while “record levels of job

losses are certainly still weighing

on the housing market and

broader economy, for those

shopping for a home now, buy-

ing power has clearly trended

up.”...

Source: DSNews

Page Three

...Is the Key

Low Rates Help The Economy

Continued from Page 1

Of course, the biggest beneficiary

of low rates is the real estate mar-

ket. Real estate has out-shined

other sectors of the economy as

the recovery has progressed.

Americans realize that sub-3.0%

rates on home loans have made

owning real estate more affordable

and they are buying so quickly that

inventory remains historically low.

Others are refinancing, freeing up

capital. But like the stock market,

the real effect of this movement is

confidence. Buying a home is all

about the future and Americans

remain confident in their future.

The ability to own a home is one

of the great principles of our econ-

omy and country -- and today

Americans are buying-in big

time...

“…Others are

refinancing freeing up capital…”

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The Hershman Group www.originationpro.com

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• Settlement Agent

• Home inspection company

• Advertising vehicles

The above list does not even include such other entities which will have to be notified or involved such as utility companies, homeowner’s associations and more. How many of the above vendors do you have relationships with? How long would it take you to evaluate the services of each? A real estate professional already has relation-ships with many vendors in each category.

Bank sales require even more assis-tance. Negotiating with a bank is much more difficult than dealing with an individual. The process can be excruci-ating. It is more difficult to access a home that may be neglected because it has been vacant. Traversing this process alone can be especially daunt-ing and any mistake could cost tens of thousands of dollars.

How else can the Realtor save me time? The Realtor will make sure you are pre-

approved before you start looking for homes. This will ensure that you do not look at homes for which you could not obtain a loan. Conversely, if you are not a first-time buyer, the Realtor will

make sure potential buyers of your home are pre-approved so you are not accepting contracts from those who could not consummate the purchase.

Bidding on a property with multiple offers? Even in a buyer’s market, well priced and desirable properties can attract multiple offers. In this case, it is

even more important that you are able to act quickly, professionally and make the best impression. How do you do that? A real estate professional will advise you every step of the way.

Can’t seem to find the right home? Buyers working on their own tend to find out about hot homes after they are sold. That is because many homes are not even listed on Multiple Listing Ser-vices before offers are made. Desirable properties move quickly. The inside information comes from–you guessed it

–a Realtor.

So why leave such an important financial transaction to chance? If you are thinking of buying or selling–talk to the right Realtor first. Not sure who the right Realtor is? We can help you find the right professional for your needs...

Homeownership Rate Rises

Address Correction Requested

In This Issue:

Low Rates Help The Economy

T

he U.S. homeownership rate soared to an almost 12-year high in the

second quarter as low interest rates allowed more Americans to

qualify for home loans. The homeownership rate jumped to 67.9%,

the highest since 2008’s third quarter, from 65.3% in the prior

quarter, the Census Bureau said. The report noted a change in methodology

that could have impacted the numbers:

Because of the COVID-19 pandemic, in-person interviews were suspended and

most of the survey was conducted by telephone, the release said. The cheapest

financing costs on record have widened the pool of people who qualify for

home loans, said Lawrence Yun, chief economist for the National Association

of Realtors.

Lenders qualify applicants by the amount of the monthly payment measured

against their income, and when financing costs go down the payment shrinks.

“Lower rates always do a magic trick of bringing more buyers into the housing

market,” Yun said in an interview....

Source: HousingWire