Ask the Realtor - Real Estate Market improving - Fed leaves interest rates unchanged

Jim E. Flynn
"Experience
& Integrity"

Ask The Realtor

As printed in the OC Register / Saddleback Valley News

Written by Jim E. Flynn, Century 21 Beachside Realtors, Lake Mission Viejo

April 2, 2010

Real Estate Market Improving, Fed Leaves Interest Rates Unchanged

Q. We are turning the corner toward spring and just how does the Real Estate Market look now?
- Emmet from Mission Viejo

A. Well, Emmet, that’s a question I have had about six times this past week. From our viewpoint the Spring Real Estate Market in South Orange County and Southern Calif. is definitely picking up.

These last two weeks we have three properties in Escrow ready to close including La Jolla Colony in San Diego, a Lakeview Townhouse on Lake Mission Viejo ..We were able to help 3 clients with leasing their properties. One here on lake Mission Viejo. We were able to get our client a signed 12 month lease with the entire 12 months lease amount including security deposits up-front with a single check for over $30,000 at the move-in. The others were in Mission Viejo, on the Golf course and the 55+ senior community of Casta Del Sol. We also just listed a 5 bdrm. property over 3,200 sq. ft. In Laguna Hills for our clients and “pitched” the details at our regular Tuesday morning Century 21 Broker/Realtor meeting @ Tortilla Flats , have an agent in our office showing the property this afternoon and today was advised by an agent he will be bring us a Cash offer for our clients at our Sunday “Open House”.

Our 12 Beachside offices, especially those in Mission Viejo and San Clemente, have all reported very good closings for this past month, which normally is a slower month. As we approach the spring months moving toward May which is historically the beginning of the upward sales curve, we expect even better action this season…. in this ever changing Real Estate market.

Q. I have heard it rumored that the Federal Reserve will increase the Federal fund rate which will eventually impact the interest rates for home Mortgages What have you heard?
- Jerry from Mission Viejo

A. Well, you question was just a couple of days early Jerry, since the Federal Reserve announced yesterday it will leave interest rates unchanged. They will maintain its target for the federal funds rate in the 0 percent to 0.25 percent range, The Fed said in a prepared statement they expects economic conditions to warrant exceptionally low levels of the federal funds rate for an extended period of time.” Information suggests that economic activity continues to strengthen and that the labor market is stabilizing."

The release also stated that “Household spending is expanding at a moderate rate, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly. Their bulletin also said bank lending continues to contract, financial market conditions remain supportive of economic growth. Although the pace of economic recovery is likely to be moderate for a time, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability,”

The Fed also said it would end its program of purchasing mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac to help keep home loan rates low. That program is scheduled to conclude at the end of this month when the Fed's mortgage bond holdings reach the $1.25-trillion limit it set last year.

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