What to Make of Mortgage Interest Rate Event (& Non-Event)
It was fairly clear that the table had been set for last week’s Federal Reserve meeting to result in a minimal rise in mortgage interest rates. Their Fed Funds rate directly influences the mortgage interest rates that banks observe. Since Delaware real estate activity can be spurred or dampened by the monthly payment amounts Delaware mortgage lenders offer applicants, this national story has meaningful local repercussions.
It wound up as a non-event that nonetheless spawned action—albeit in a minor way. In May, Chair Yellen had said that a rate increase would be “appropriate” over the summer months. In the lead-up to last week’s meeting, other Fed governors had strongly implied that it was now time for a slight Fed Funds bump.
Still, most commentators kept their prognostications vague; they had been vociferously anticipating a move for many cycles, only to hear serial postponements from the Fed. In addition to having been burnt before by Fed head fakes, there was also another reason why a no-go might happen this time around. Regardless of what the jawboning had been, economic and employment growth was still stuck in first gear—and a rate hike could retard improvement.
The commentators weren’t wrong to hold fire. Once again, the Fed did nothing (except make even more noise about an interest rate hike…later).
Yet, even so, the market forces that nudge mortgage interest rates one way or the other did seem to react. After the non-announcement, rates barely budged at first—but then continued steadily lower (the lowest in weeks, in fact). By week’s end, the Mortgage News Daily announced that the string of moves had brought mortgage interest rates into a “post-Brexit range”—similar to the conditions “that sent rates plunging toward all-time lows.”
The reasons last week were less than certain, although frustration with the Fed’s lack of coherence was fairly unanimous. CNBC interviewed big time investment manager Bill Gross, who said that investors were left “very confused” by the meeting’s outcome. He pointed to the likely rate raise that Yellen had emphasized at last month’s Jackson Hole speech, as well as to Fed Vice Chair Stan Fischer’s earlier assurance that there would be two hikes this year.
All this left Delaware mortgage interest rate watchers to make their own assessments about what to expect for future conditions—most importantly, whether current favorable low interest rates could be counted on for long. There had been at least one indicator that optimists could welcome. Almost unnoticed was a footnote to the Fed’s announcement. Back in June, the Fed had predicted the lending rate to end 2016 at .9 percent. It now said the likely number would be .6%. That would result in Delaware mortgage interest rates still comfortably in the historically low range—hardly a flashing red light for would-be borrowers.
- Written by Russell Stucki
Could "Millionaire Flight" Affect Selling Your Rehoboth Beac
Nobody in Rehoboth Beach can escape the fact that we are now engulfed in the full-bore election year media onslaught. You would need to be living under a rock not to have noticed—and the rock would have to be somewhere out of earshot of radio and tv.
Fortunately, since this is a space where we discuss buying and selling homes in Rehoboth Beach, we try as best we can to steer clear of politics; so let’s enjoy this island of non-partisanship…or perhaps that’s impossible, because of the topic, which is too interesting to ignore…
Recently, a study came out of Stanford that answered an intriguing question: do higher taxes drive wealthy people out of state? If you ever plan on selling a high-end Rehoboth Beach home, the answer would be more than academic. Whether our own state’s position on the tax rate hierarchy could measurably affect high-end property marketability—that is, if the well-heeled set are beginning to allow changes in state tax tables to determine their home base—is very much at issue.
So this investigation (it was sponsored by the U.S. Treasury Department), which focused on millionaires, came up with the statistical answer to the question (as Forbes put it) of “Do High State Taxes Drive Away the Rich?
For any agent running million dollar listings—or for any multi-million-dollar property owner considering selling their home in Rehoboth Beach anytime soon—that’s one fewer factor to have to address. The study found that U.S. millionaires who earn over $1 million annually are actually one of the groups least likely to relocate to a new state. It could be because their seven-figure incomes are tied to their current locale; or it could be because in the rarified atmosphere mega-incomes provide, marginal tax rates don’t matter (I doubt that—high income folks usually have plenty to worry about, and taxes are certainly in there).
Also interesting: the lower your household income, the more likely you are to move. In a mobile society like ours, that seems to make good sense—and is somewhat reassuring. People are still chasing opportunity; are still motivated to go where jobs can be found.
So what does this mean for those selling a home in Rehoboth Beach? Or buying one?
- Written by Russell Stucki
For Rehoboth Beach Real Estate Investors, a "Bubblicious" Re
If you are one of Rehoboth Beach’s real estate investors (or have been interested in how real estate stacks up against other investment classes), the insights of AIG investment honcho Doug Dachille would likely get your attention. Dachille is American International Group’s Chief Investment Officer. That makes him the decision-maker for the insurance giant’s $350,000,000,000 (that’s billion) portfolio.
Last Friday, Bloomberg TV aired a candid interview on the subject of how he feels real estate investors are likely to fare. The attention-getting interview ran under the heading, “AIG’s Dachille Rejects ‘Bubblicious’ Critique of Real Estate.”
It might seem that your typical real estate investor in Rehoboth Beach has little in common with the director of such a gigantic bankroll, but that’s not necessarily the case. It turns out that insurer AIG—just like any local real estate investor—labors under the necessity to safely maximize returns in order “to back obligations to policy-holders.” With government debt interest rates unappetizingly low, it has set the giants (like AIG, MetLife Inc., and Prudential Financial Inc.) scrambling for investment outlets. One answer has been to enter the arena of real estate investors, principally as lenders.
“Insurers hold funds for long periods of time…[so they] have been counting on real estate lending to obtain higher yields available to investors who are willing to sacrifice liquidity.”
So where does the “bubblicious” headline come in? It turns out to be a rejection of an earlier analyst who appraised the current real estate market as looking “a little bubblicious”—one that could face shocks should interest rates climb. That kind of worrisome analysis could cause some sleepless nights for Rehoboth Beach real estate investors with memories of the previous real estate bubble.
A return to peaceful snoozing would have been restored if they happened to catch Dachille’s response. With a very sizeable ($22.9 billion) portion of AIG’s stake in direct commercial mortgage loan exposure, he sees the ability to raise rents as a satisfactory counter to the inflation risk. “Commercial real estate is very similar to an inflation-protected bond,” he said; “What’s…bubblicious?”
Dachille regards the sector as presenting an attractive place for long-term returns—with a risk factor on a par with alternatives currently offering much lower yields. He revealed that AIG has been scaling back investments in hedge funds for a number of reasons. One that might ring true for Rehoboth Beach real estate investors is many funds’ relative lack of transparency. As Bloomberg summarized, “He was uneasy about funds when he can’t track their trades.”
- Written by Russell Stucki
A Real Estate Agent in Rehoboth Beach Wears Many Hats
The best real estate agent schooling isn’t something that takes place in a classroom. That kind of school is necessary, of course, because some of the most important work every Rehoboth Beach real estate agent does has to do with being intimately familiar with the letter of current state laws and Department of Real Estate strictures.
Observing best practices—keeping on top of all the current professional guidelines and legal regulations—does form a solid foundation for building a career in the profession. But important as that is, it’s only a foundation. You have to get busy and build something on it.
As every Rehoboth Beach real estate agent soon discovers, doing the kind of effective job that sets you apart begins early in the morning, and often continues long past what is quitting time in many a 9-to-5 occupation. What’s unusual about what goes on during that day is the array of specialized activities to be attended to. Just about every day, you will be energetically juggling tasks satisfying a wide range of different needs, for instance—
- Pulling and reviewing activity reports from the Rehoboth Beach Multiple Listing Service
Keeping your finger on the pulse of the community yields the up-to-the-hour intelligence that’s a vital resource for sellers and buyers in our active Rehoboth Beach market
- Monitoring and responding to online contacts
Increasingly, as email and messaging become central to real estate activity, near- instantaneous response times are the norm
- Scheduling showings
Arranging showings to accommodate both owners and buyers—and handling the inevitable last minute changes—calls for organizational perseverance (and an abidingly calm demeanor)
- Creating and executing media marketing
Fashioning the kind of attractively worded and designed listings is only the start of the all-important media campaigning that translates into results for your clients
Simultaneously, an accomplished real estate agent often will be keeping track of closing deadline requirements, handling negotiations between buyers and sellers, facilitating communications with home loan brokers, home inspectors, photographers, staging companies and any number of other facilitators…and fielding the dozen other details that might crop up unexpectedly in the course of the day.
- Written by Russell Stucki