An article this week in the Huffington Post Business section, titled Dow Closes Down 588 Points Amid Worries Of China Slowdown moved me to write this post. Even though there was some recovery in the market on Wednesday the market is still volatile. In looking at this from the prism of a single family home investor; there are pros and cons to consider.
On the pro side, it’s already assumed that any interest rate hike by the fed will now be postponed until things feel stable. Since it takes time for a rate hike to translate to mortgage rates, we get more time with our delightfully low mortgages. Of course since most mortgages have yearly caps, it will take even longer (in some cases much longer) for rates to climb in a significant way.
Also on the pro side, people are confused as to where money should operate. The knee-jerk
reaction is to have money sit as cash (with
close to zero yield). However when people are scared of stock markets, real
estate and (especially) single family homes usually become more interesting as a
safe hard asset which produces income, which we tell our clients at ICG as well.
People may also feel this is not a bad time to pull money out of stocks and finally buy a home for themselves, since they might have been planning to do it anyway - this would not be a bad time to deploy that cash, right into locking in a low rate 30-year fixed loan. This of course would boost real estate markets in the single family home sector.
On the con side, obviously what is happening is not engendering a lot of overall economic confidence and more doom-and-gloom messages are circulating. This can create an environment where people "hunker down" which will not help the housing market.
During our upcoming 1-Day Expo, we have invited Dr.Lawrence A. Souzato to discuss this and other important economic waves now manifesting. Don't miss it!
We will also have Ralph Bunje Jr. talking about reverse and regular 1031 exchanges and how to do them right, and Charles Byrd about using Evernote for business, and total life organization and efficiency. We will have market teams from the best United States markets and lots of Q & A, networking and learning. Anyone mentioning this blog can attend for free with two guests. Just email us at firstname.lastname@example.org or call at 415-927-7504. Looking forward to seeing you!