Florida Housing Market

Since our last newsletter home interest rates, particularly the 30 year fixed interest rates, have gotten considerably worse. Because of this I have included the FNMA 30 yr 6.0% instead of the 5.5% bond chart to better reflect today’s rates.

That’s right, rates have gone up more than three quarters of a percent from last month. The 30 year fixed rates went from 5.75% to 6.625%. The Bonds are now testing the lows reached last year before they staged a rally which got the 30 yr rates to under 6%. We will have to wait and see if the Bonds can hold this support level and eventually get the 30 yr interest rates back to under 6% or if those rates are a thing of the past.

The culprit causing these higher interest rates is inflation. It’s bad enough we have to deal with inflation at a national level but it now appears that inflation over seas, especially in Europe, is affecting our rates as well.

The Fed has stated that the their rate cutting bias has ended and they have taken a wait and see approach to their next interest rate move, which will more than likely be an interest rate hike later this year or in the first half of 2009.

There are differing opinions on whether to raise interest rates now or later. Some say "now" to help reel in inflation and maybe more importantly help shore up the Dollar.

Others including Ben Bernanke are of the wait and see mentality. Their fear is that raising rates now could throw our fragile economy into a deeper recession. It is Fed chairman Ben Bernanke’s opinion that the "slack in the economy " will help to lower inflation through consumer’s lack of demand.

Stay Tuned,
Todd Dawkins

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         What doe’s this mean for you?

As a home seller, rising interest rates help keep home prices lower. This means if you are waiting for the market to "come back" so that your house will sell at the price you are asking, then you might be waiting a loooong time. If you haven’t been able to sell your home and need too, then you should probably listen to the realtor who told you to lower your price.

As a home buyer, higher interest rates negate housing price declines when it comes to monthly payment and afford ability. Those of you sitting on the sidelines waiting for housing prices to decline more could be making a mistake if interest rates continue to climb.

Locally, I have seen an increase of investor activity from the individual investor buying one house to the large multi-million dollar investors buying whole complexes.

To Your Financial Health,
Todd Dawkins

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             Funny Bone

According to a news report, a certain private school in Washington was recently faced with a unique problem. A number of 12-year-old girls were
beginning to use lipstick and would put it on in the bathroom. That was
fine, but after they put on their lipstick, they would press their  lips
to the mirror leaving dozens of little lip prints.
 
Every night the maintenance man would remove them, and the next day the
girls would put them back.
 
Finally the principal decided that something had to be done. She called
all the girls to the bathroom and met them there with the maintenance
man. She explained that all these lip prints were causing a major
problem for the custodian who had to clean the mirrors every night (you
can just imagine the yawns from the little princesses).
 
To demonstrate how difficult it had been to clean the mirrors, she asked
the maintenance man to show the girls how much effort was required.
 
He took out a long-handled squeegee, dipped it in the toilet, and
cleaned the mirror with it.
 
Since then, there have been no lip prints on the mirror.
 
There are teachers .... and then there are educators.