Third Quarter, 2003
A lot has happened in real estate since my last newsletter. The stock
market has begun to show signs of improvement—both the NASDAQ and Dow are up significantly since the start of the year. And mortgage interest rates have started to climb considerably the past few weeks. (It is a good thing everyone just completed refinancing their properties).
What does this mean for our real estate market? The increase in interest rates will probably cause a short-term slowdown in activity in the market under a million dollars—this range has been the most sensitive to changes in rates. It will take a while for Buyers to adjust to their new reduced purchasing power based on the higher rates.
Conversely, the improved stock market has created more overall wealth, which should benefit properties that are more expensive. Higher priced properties tend to be less sensitive to fluctuations in mortgage rates than to the perception of the economy’s health. Sales of properties over a million are up slightly compared to last year. However, this is likely due to appreciation of lower priced properties that are now selling for over a million, not to the strength of the estate market.