Lake Tahoe Mortgage Rates and Lake Tahoe Home Loans:
Here comes real estate, indeed! Existing home sales in July were the strongest since a government tax credit temporarily boosted demand in November 2009, and second-highest since March 2007. The National Association of Realtors®, among others, is arguing that the bump in mortgage interest rates two months ago was a big motivator for potential homebuyers, convincing many of them to apply for purchase money mortgages before rates went up even further.
Many of us predicted this would happen if rates rose, but there may be more to the matter than this obvious reasoning can explain. For one thing, after the credit markets reacted harshly to higher rates, the dust settled rapidly. Rates didn’t return all the way to their former lows, but they slowed their upward movement for the most part.
At this point, rates continue to tick like a slow-moving, steady clock as they move higher. The rush to apply for financing isn’t entirely borne out by reality, therefore. Other factors are clearly involved.
With more inventory coming to market, we’re already seeing a slowing trend for price appreciation. To be sure, there are real estate markets whose sales volume and price appreciation still take our breath away…but even in such extreme markets, there is a sense in the air that all-cash deals may soon give way to more lender-financed transactions and prices may ease slightly from their rapid rise.
Intriguingly, the recent trend of rising mortgage rates caused applications for refinancing loans to fall off by a steep 8% last week, but the number of purchase money loan applications rose by a steady 1%, suggesting that the home-purchase market is warding off any slowdowns caused by interest rate changes.
In other words, what we have here strongly suggests a strengthening of the current trend: The real estate market is still recovering well in much or most of the nation.
The NAHB Housing Market Index, based on an extensive survey of American homebuilders, corroborates this impression. Moving from a strong 56 (the revised figure for July) to 59 (the August figure) suggests the new homes market—if not construction of new homes—has truly taken off. At 59, the index has reached “its highest reading since the really big bubble days of 2005. Strength is centered in the 6-month outlook which, at 68, points to increasing confidence among builders and what is likely to translate into increasing strains on the construction supply chain.”
One suspects that the new home market’s strength may lead to a much hotter construction industry, and that existing home sales may continue to gain in strength as well.