Shasta Association of REALTORS® My Market
The real estate market can be fast paced and ever-changing, like attempting to take a still photograph of a speeding target! With that in mind, we offer My Market! The resources herein are designed to provide you with market information, not just figures, necessary for your home buying or selling decisions. Of course, this information cannot take the place of the knowledge and experience of your REALTOR®, rather it supplements those professional skills to sort through and interpret how those market changes impact you as a buyer or seller.
Brexit Hurts the Economy but Could Benefit the Housing Market
On June 23, 2016, British voters decided that it was about time for the United Kingdom (“U.K.”) to break loose from the European Union (“E.U.”), as they voted 52 percent to 48 percent in favor of leaving the E.U. Global financial markets reacted violently to the “Brexit” decision, with the Dow Jones, S&P, and Nasdaq indices all tumbled 3.4 percent or more on the day the voting results surfaced.
Pound to dollar exchange rate also dropped sharply after the breaking news. In just a few hours overnight, as the “Leave” campaign gained momentum, the British pound to U.S. dollar rate hit 1.33, reaching the lowest level not seen since 1985. For US travelers going to the U.K. for vacation, that’s good news. The drop in the value of the currency means more bucks for your pounds when you are on vacation. But this is bad news for exports from the U.S. to the U.K., as Britons now need to pay more for the same American products, which would mean fewer goods being sold to the U.K. in the near future.
This direct effect on U.S. exports, however, appears to be rather limited, as the U.K. accounted for less than 4 percent of American exports of goods in 2015, which is equivalent to only 0.4 percent of U.S. GDP. The direct economic impact on the U.S. economy would be miniscule, even if the U.K. economy slipped into recession.
The more significant damages, however, could be coming from indirect effects. The panic selling in financial markets around the globe was due primarily to uncertainty about the economic conditions of the U.K., the E.U., and the U.S. The health of the U.K. will take a hit in the upcoming quarters, as existing trade agreements with the E.U. and other countries started being questioned, while business investments to the country will be put on hold due to lack of clarity and confidence in the economic and political environment.
The housing market could benefit from Brexit outcome though. Treasury prices soared as investors flocked to the perceived safe haven of government bonds amid global stock selloff after the U.K. voted in favor of leaving the E.U. The yield on 10-year Treasury note ended down 16.4 basis points to 1.58 percent and the 30-year yield fell 13.1 basis points to 2.43 percent. This is good news for homebuyers as mortgage rates follow the same movement of the long-term Treasury yield. Rates were expected to remain near 4 percent for the rest of the year before the Brexit vote, but the latest development could potentially push rates further down to levels last seen in 2012. Brexit also pretty much slammed the door shut for any Fed rate hike this year, as tight financial conditions resulting from the meltdown in equity markets could decelerate economic growth in the U.S., as well as many economies overseas. (Article courtesy of California Association of REALTORS®, Market Snapshot, July, 2016) For more information on this topic or other real estate matters, please contact your REALTOR®.
C.A.R and CCRE's Housing Matters Podcast: Understanding Brexit
A recent release from C.A.R. addresses the question . . . Curious about Brexit? Need help understanding what it means? You’re in luck, as a special edition episode of the Housing Matters Podcast features analysis from C.A.R. economists Oscar Wei and Jordan Levine. C.A.R.’s Center for California Real Estate recently launched the Housing Matters Podcast – your housing hub that keeps you in the know. Be sure to subscribe on iTunes to hear the latest episode every Friday to learn what you need to know about the market from C.A.R. experts who will provide their take on the week’s top real estate stories. The podcast will keep you up-to-date with market analysis, real estate research, economic trends, and housing news.
Read the full story.
The Pros and Cons of Low Mortgage Rates
According to REALTOR® Magazine, many economists saw their predictions of higher interest rates and stronger economic growth shattered this year, mainly due to global economic uncertainty which was then heightened by Junes’ Brexit vote in the U.K.
Instead, the U.S. is currently experiencing low interest rates and mortgage rates that are the lowest since 2013. While these low rates are boosting the purchasing power of buyers, “A look at the pros and cons of this recent drop in mortgage rates shows that they may not be as unambiguously beneficial to the housing market as previous low rates have been,” says Danielle Hale, N.A.R.’s Director of Housing Statistics.
Take a look at the list of pros and cons in her recent blog post. ("Low Mortgage Rates and the Housing Market: Pros and Cons", Economists; Outlook Blog - July 7, 2016)
- Nearly half of renters (48 percent) plan to buy a home in the future, with 10 percent saying that they plan to buy within a year.
- Homeownership remains important to renters, with nearly half (45 percent) rating it 8 or higher in importance on a scale of 1-10, with 10 being extremely important. The average was 6.8.
- Nearly all renters (95 percent) see advantages to homeownership; freedom to do what you want with your home, building equity, and having permanence and stability were the top benefits mentioned by renters.
- One of the surprising findings of the survey is that more than one in four millennial renters said they plan to purchase a home that will accommodate their parents, and about one in five millennials indicated they plan to pool funds with family members to buy a home.