1. IntheNews Presented by
Prairie Title
Commentary by Frank Pellegrini, Prairie Title CEO
February 29, 2016
Happy leap day everyone! Let’s all make this extra business day in February
count as we align our calendar with the earth’s 365.25-day revolution around
the sun.
A funny thing happened this long February on the way to higher interest
rates. The Fed raised the its benchmark short-term interest rate two months
ago and there was a brief rise in mortgage interest rates, but since then rates have been falling.
Quoting CNBC:
“Who knew? The Federal Reserve raised its funds rate barely two months ago, and all that worry
about higher interest rates for mortgage borrowers ended up being positively unwarranted. The
average rate on the popular 30-year fixed mortgage began a free fall, reacting to financial markets
overseas rather than monetary policy here at home.”
What happens to the real estate market if rates keep falling? No one can be sure, of course. Amidst
falling rates, January was a decent month for housing. The NAR recap of January activity is titled:
“Existing-Home Sales Inch Forward in January, Price Growth Accelerates.” Ithink the key word in
that headline in “Inch.” That’s how I view the real estate
market in 2016. Moving forward, but inch by inch. Unless
and until we break out of the economic doldrums, we seem
likely to keep treading water but not quite reaching the life
raft.
NAR chief economist Laurence Yun put it this way in their
Feb. 23 press release: “The housing market has shown
promising resilience in recent months, but home prices are
still rising too fast because of ongoing supply constraints,”
he said. “Despite the global economic slowdown, the housing sector continues to recover and will
likely help the U.S. economy avoid a recession.”
Avoiding a recession is certainly desirable. If we navigate the shoals of ’16 successfully, perhaps we’ll
be rewarded with a stronger market later I the decade.
Let’s keep the discussion going. Call or email me, or write a comment on my blog.
Other stories we’re following:
Here’s a positive:The
groundhog saw his shadow
earlier this month.Let’s hope
he’s right about Spring
arriving soon with home
buyers in tow!

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