The Federal Reserve is scheduled to end their debt purchase program on April 1 – April Fool’s Day, partly as the result of a fear of negative perception worldwide that the U.S. government is simply printing money in order to solve the mortgage crisis. Analysts believe that the Feds want to avoid the possibility of a sell-off of U.S. government bonds that could result if that perception became widely believed.
Boston Fed President, Eric Rosengren said that he believes mortgage rates will rise about three-quarters of a percent to about 6 percent as a result. Things may be a little “wobbly” at first; however, there is an acknowledgment by Fed Vice Chairman Donald Kohn that “We are still in unchartered waters…We will need to be flexible and adjust as we gain experience.”
It is anticipated that the Fed is unlikely to step in again unless a renewed crisis occurs, such as a sudden and destabilizing rise in mortgage rates. There seems to be an indication that the Feds would like to move away from their reliance on unconventional policy measures.
In a policy statement issued after the Fed’s December meeting, the central bank reiterated plans to finalize the program by the end of March and was planning to continue to close down other emergency measures as scheduled.
Said Torsten Slok, senior economist at Deutsche Bank,” That was a fairly strong signal that they will not continue the purchases later on”.
So, let’s take a look at what options are still currently available for folks interested in purchasing a home in the Orange County Real Estate Market in the next few months:
- Home prices that have been adjusted lower from their market peaks
- Low interest rates
- Tax Credits for both first time home buyers and existing homeowners
- Buyer protection programs offered by some banks and some Real Estate Groups, such as California Association of Realtors
- A large inventory of homes from which to choose – with many custom homes in the Laguna Beach Real Estate Market
Everyone seems to be in agreement that we need to get the inventory of distressed homes off the market before we see overall market recovery in prices. The question is, are you ready to be one of those new homebuyers that will benefit from the current market and the government incentives?
Take the time to review your personal financial situation, talk to your lender, and be certain that you are not missing a rare opportunity. Don’t be concerned if you are not quite ready to make that purchase, find out what you need to correct, improve, or save, in order to get yourself ready to purchase that home you’ve had your eye on.
Until next time…
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