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Low interest rates: Carpe Diem or time market, recession?

 
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RealEstateCafe



Joined: 11 Dec 2007
Posts: 231
Location: Cambridge, MA

PostPosted: Thu Feb 06, 2020 7:55 pm GMT    Post subject: Low interest rates: Carpe Diem or time market, recession? Reply with quote

Sent this note to one of our homebuyer clients. What do others on BostonBubble think? Glad to talk offline over beer, see #REonTap

http://bit.ly/Search_REonTap

+ + +

Haven't seen a similar headline yet in Boston, but listing agents and the media LOVES to hype BLIND bidding wars. As soon as the first headline hit's Boston, it will normalize that expectation that buyers should bid over asking price to prevail over other buyers purchasing homes listed in the MLS:

https://dc.urbanturf.com/articles/blog/the-dc-area-neighborhoods-where-40-of-homes-sold-for-above-asking/16426?

That's why I recommend that you develop a Plan B & Plan C upfront, that way you can sit out the real estate equivalent of "seasonal affective disorder," and come back after the 4th of July when motivated sellers begin price reductions, or after the election pause.

Have you see any of the headlines unfolding in the last 24 hours given MIT's prediction -- 70% probability of a recession within six months? My guess is that is why lenders are slashing interest rates to their lowest level in three years. Some observers say rates could go below their lowest rates ever, 2012:

MIT predicts recession within six months
http://bit.ly/MITPredicts_Recession3Q2020
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PostPosted: Sat Feb 08, 2020 11:49 pm GMT    Post subject: Reply with quote

I really believe the coronavirus pandemic will cause a temporary world-wide recession soon so I'd hold off on buying until the Fed goes negative on interest rates. You will see 30 year mortgage rates go down to 2.5% or even lower in the next few years. You will get your buying opportunity when both house prices and mortgage rates tumble. I'm going to re-finance when rates bottom out. Yes, you can time the market.
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PostPosted: Sun Feb 23, 2020 4:30 pm GMT    Post subject: Reply with quote

If interest rates go lower, doesn't that translate into home prices inching even higher? I don't know.

Anecdotally, in recent conversations with property owners in the Boston area, not one of them thinks that a downturn will happen here. I mentioned the coming reported recession to one such person who quickly responded that it won't affect the housing market. Again, I don't know.

I can't wait a few years for the next "bottom". I have to find a new place to live in the next year or two and I'm not looking forward to it.
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PostPosted: Tue Feb 25, 2020 2:55 am GMT    Post subject: Reply with quote

Anonymous wrote:
If interest rates go lower, doesn't that translate into home prices inching even higher? I don't know.

Anecdotally, in recent conversations with property owners in the Boston area, not one of them thinks that a downturn will happen here. I mentioned the coming reported recession to one such person who quickly responded that it won't affect the housing market. Again, I don't know.

I can't wait a few years for the next "bottom". I have to find a new place to live in the next year or two and I'm not looking forward to it.


Here's another public service announcement. Quietly go to every store and buy enough N95 masks for anyone you care about. Very few of the Chinese healthcare workers who wore N95 masks got ill, but many who didn't wear them got sick. There aren't enough masks for everyone there and there aren't enough masks for everyone here.

The general consensus among infectious disease experts is that 60% of the general population will catch the coronavirus in the next 2 years before vaccines will be available for everyone. 1-2% will die and most of them will be over 60 and homeowners. It's morbid to think that death will flood the market with inventory much like the Great Recession, but life is cold and unfair. You won't have to wait long to see if I'm right and I certainly hope I am wrong. I don't want anyone to die.
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PostPosted: Wed Feb 26, 2020 2:41 am GMT    Post subject: Reply with quote

A few weks ago, the father of one of my students did this. He makes his living
selling things on Ebay and Amazon.
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