Question: Should We Worry About the Fed Raising Interest Rates?
The Fed Reserve has been warning for years it plans to raise interest rates, but never follows through on the plan. It gets scared because the economy doesn’t look good, and then backs off. The Fed warned yesterday that it could raise rates in June. Just the warning could send folks running to brokers to refinance (again) or buy…
The Fed Reserve has been warning for years it plans to raise interest rates, but never follows through on the plan. It gets scared because the economy doesn’t look good, and then backs off. The Fed warned yesterday that it could raise rates in June.
Just the warning could send folks running to brokers to refinance (again) or buy something asap. If the Fed were really to do it, it could depress home prices — or more.
Should we take it seriously this time?
I’m not sure why anyone would worry that the Fed may raise rates unless you have a directional bet on the level of interest rates? “Worrying” would put you in the class of real estate speculator rather than home buyer.
So “Lee” (of yesterday’s phone calls) called back five minutes ago and started inquiring about whether I wanted to sell. Guess she’d lost track of which numbers she called yesterday. This time I had my caller ID turned on; she was calling from a 718 number on Nostrand Avenue, zip 11225, tagged as “Attorney at Law..” While we were on the phone I searched that number and found the address. No website. So I replied that we had spoken yesterday, I’d told her I wasn’t selling, and that she’d claimed to be just married – and that my caller ID showed that she was calling from a law office. She replied, “Yes, I’m calling from my job.” Which presumably is to pose as half of a just-married couple and hustle seniors to sell for a pittance. This is kind of amateur night; most callers at least spoof their phone numbers or come up as Caller Unknown.
Which service did you use for the reverse phone lookup on this cold calling info-gatherer?
Just googled the number, which brought up the name of the law practice and its address, on multiple sites, with map.
Some economist characterized the historically low interest rates as a “drive-by shooting of savers.” Seniors uninterested in risking their savings in the stock market deserve better than the current interest rate environment. And maybe higher interest rates will stop the calls I get every day from people sitting at phone banks and pretending to be “a nice young married couple that just moved to New York City and loves your house” while making offers for a quarter of its current market value.
Agreed, slopefarm, but that is a small number compared to actual homeowners. If a change in rates would change your purchasing decision – and I’m sure it happens – then you were probably at the tighter end of affordability metrics to begin with (and with stricter underwriting standards, its questionable as to whether you would easily qualify to begin with). Will it cause some people to move to lower priced and potentially smaller homes, sure. I don’t see how existing homeowners are affected unless you are marking your homes value to market every day. With typical holding periods of 5-7 years, it shouldn’t matter. To speculators, it may matter more.
This conversation seems to be about the effect it would have on homes, not someone’s investment portfolio. At the same time, you are overestimating the effects. Sure, they will underperform when rates rise – that’s the nature of the bond market – but retail investors are generally buy and hold – older folks who want steady income, so the absolute level of rates won’t matter much to the mom and pop investor unless inflation moves rigth along with it. These are investments with fixed time frames, so over time you are moving down the yield curve. At the specific time, you should compare your coupon with the current level of interest rates at the remaining time to maturity. Institutional investors are sitting on a number of low coupon bonds- again, the “life” of their investments shorten as time passes. They also have constant cashflow to average returns up as bonds mature or are redeemed and they are able to invest at current market rates in the future which would be higher than what they are currently.
Doubt it seriously. Yesterday she first offered $750,000; when rejected, consulted with her “husband” and immediately upped the offer to $1.5M based on an appraisal I described that she’d never seen – for a house she’d never been inside of. That’s what speculators would pay for a shell in this area, so what’s inside is irrelevant (got another offer from a guy with a high tone English accent who stated simply that he was “in the real estate business” a couple weeks ago – also for $1.5M). Therefore, I presume that Lee is not half of a nice young married couple, and that she asked her boss, rather than her husband, for permission to up the offer – and then lost track of where she’d stopped on yesterday’s call list, and so called me again today after the turndown. Either that, or she has to be half of a newlywed couple with plenty of cash, an aversion to brokers, and no familiarity with market prices in Clinton Hill and Fort Greene – which sounds a little dubious. I’ve also gotten calls from women claiming that they “understood your house is going to be on the market soon” – based on an allegation that they walked by and saw someone taking photos of it, and that they presumed that was a listing broker. But when I asked them to describe the front of the house, they couldn’t. The variations on the scam are legion, but the “nice young married couple” – frequently “about to have a baby” seems most popular. Not all my neighbors get these calls, but I’ve noticed what appears to be a generational bias….which leads me to suspect that these outfits research last sale dates on ACRIS (possibly with bots?) and specifically target homeowners who bought in or around the 1980s.
They’re still littering on my block; and I’ve gotten both varieties of calls. I usually just hang up on these people, but yesterday’s was too good not to tease. It was a woman purporting to be “just married” who offered $750,000 for a house appraised last week (for a small refinance) at $2.5M….but to get the $750,000 I would have had to let her in for a grand tour next week (not happening – who IS this person?). I told her no way, everyone else makes offers sight unseen…and mentioned the appraisal. She asked if I had a copy; I said yes. Then she said she had to consult with her “husband.” She called back ten minutes later and offered $1.5M sight unseen, which I also turned down. Then she asked my price. I told her I wasn’t selling – and that when I was ready to, I’d list the house with a reputable broker. What’s scary is that these outfits must strike pay dirt often enough to make the effort worthwhile….and the people they scam are probably elderly and vulnerable. Maybe the “just married” pitch is geared to homeowners who bought x number of years ago and are presumed to be kindly and senile. To the best of my knowledge, I’m neither.