When Federal Reserve Board Chairman Ben Bernanke told Congress it appeared the once high-flying housing market was making a safe landing, he was right on target. On August 8, the Fed left its federal funds target rates alone for the first time in two years, saying that its run of 17 straight rate increases since June 2004 was having the desired effect.
For those of you who don’t follow the Fed, this rate directly determines the cost of loans within the banking system and indirectly influences other loan rates. Furthermore, it should be comforting to know that the 2.5 percent growth rate in the U.S. housing market should cause no panic. The National Association of Realtors, the U.S. real estate industry’s largest trade group, said that home prices probably will gain 4.3 percent this year. Sung to the Prairie Home Companion tune of “wouldn’t this be a great time for a little rhubarb pie,” maybe now’s the perfect time to get your real estate license.
Housing has been one of the few reliable generators of jobs for the past five years, and one of the only industries creating good jobs for workers without college degrees. Since 2001, the little real estate engine that could has outpaced even healthcare, with over one million jobs added from the housing sector.
The Federal Reserve’s two-year campaign of raising interest rates in a move to curb inflation has had some effect on the housing slowdown, but depending on where you look, some will tell you the boom is still on. So says George Vaughn, a business manager for a local of the Laborer’s International Union of North America that represents almost 50,000 workers in Las Vegas. As reported recently in The New York Times, “building activity for single-family homes, condos, hotels and casinos in Las Vegas is vibrant enough that construction workers are not struggling to find work.”
Times writers Vikas Baja and David Leonhardt add, “The fact that mortgage rates remain low by historical standards offers one reason to doubt that a crash will happen.”
At press time, the interest rate on a 30-year mortgage is still under seven percent !!
Serve it up, nice and hot; maybe things aren’t as bad as you thought.”
Be bop a reebop, rhubarb pie.
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About The Author: Tom Davidson is the acting Director of Sales & Operations for Colibri Real Estate, LLC. Since 1996 the companies under this banner have offered online real estate licensing and insurance licensing courses as well as online real estate exam prep and insurance exam prep.