Monday, February 29, 2016


In the News

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.”

                                           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!

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.” I think 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 in the decade.


Let’s keep the discussion going. Call me, email me, or write a comment below.


Other stories we’re following:
CFPB Pledges Leeway in Early TRID Exams.
MBA: Commercial to Grow.
Yellen not Writing off Negative Rates.
Can Homeowners Crack the Credit Box?