Real estate economics

The Tear Down Conundrum


The Tear Down Conundrum

Newton, MA.  Realtor  Sotheby’s Newton, MA

for sale sign

 I am reposting this blog and next week I will update you with what is happening (or not) in Newton regarding the proposed building moratorium.  

 

Last week I had the unfortunate experience of attending a Newton Historic meeting.  A client purchased a house on the south side of Newton.  The house is an average home built in 1959 in a modern style.  By today’s standard the house doesn’t really work.  The bedrooms and baths are very small and closet space is lacking.  The kitchen is a small box with the original appliances.  The oven is sooo cute but has the capacity of an easy bake oven.  The yard is very large and flat and the lot size is well above average for Newton.  The client brought her contractor to the house and the contractor said it would actually cost more money to renovate and expand than tear the house down and build new.  The couple was undecided if they wanted to tackle a new house design and build but decided we should start the process in case that was the route they wanted to take.

We asked the seller to apply for a demolition permit to speed the process along.  Any structure that is more than 50 years old requires a historic review.  Often times this is just a formality.  The staff member pulls the building jacket and digs around to find the history of the house and the neighborhood.  The applicant must bring pictures of the exterior of the house from all angles and the surrounding properties.  After reviewing the pictures, considering the findings presented and listening to the neighbors object to every request, someone on the commission makes a motion, someone else seconds and the commission votes.  The choices are Preferably NOT Preserved or Preferably Preserved.  Not preferably preserved gives the owner the green light to proceed with demolition.  Preferably preserved comes with a one year delay in tearing the home down or in special cases an 18 month delay.  After one year, the owner can tear the house down at will!  As far as I can tell most people in the audience were not aware that once the owner waited out the year they could build ANYTHING as long as it met with zoning guidelines.

Personally, I am not advocating for more or less leniency regarding teardowns.  I was appalled at the rudeness and lack of respect 2 members of the commission displayed.  I did get the sense that these two members had little regard for what was brought forth and had already made up their minds.  What I do know is that every neighborhood changes and evolves.  I am sickened by some of the ugly cookie cutter homes that builders put up with no thought to the lot or neighborhood.  Nevertheless, people do buy these homes and I do not think we should be legislating taste.

I am in complete agreement with the zoning changes implemented in 2011 to prevent monstrosities from being built on tiny lots.  I am perplexed why some permits are granted and some are not.  I get the feeling neighbors get upset that their neighborhood is changing and go to these meeting to fight for the status quo.  I understand they are afraid that the new owner will build a hideous house and cause a disruption on their street.  What I would like to see more of, is neighbors working with neighbors to create a home that brings a 21st century vibe while the new construction improves the whole neighborhood instead of sticking out like a sore thumb.

There was one particular case at last week’s meeting.  A home was purchased in April and some serious problems came to light, the owners thought it was more prudent to build new rather than fix the many structural problems they encountered.  The owners hired an architect who designed a more current larger version of the old house but still worked beautifully with the neighborhood.  The neighbors loved the house and were supportive of the demolition.  In another case I was taken aback by neighbors’ objections to a  house being taken down because the foliage was so special.  I kid you not – the discussion dragged on about his “beautiful” foliage which consisted of rose bushes hanging over a chain link fence.  Many neighbors concerns revolved around the fact that there are too many development projects and the feel of their neighborhood is changing.  My answer to that is time does not stand still.  This is the perfect opportunity for the developer/owner to work with the neighbors to design a house that works with the surroundings.  It can be done and has been done…attend a special permitting hearing and you’ll be flabbergasted about your own neighbors’ behavior.  You’ll want to lock up your kids and dog and pray they don’t own a gun!

Yikes!

Yikes!

I am torn between property rights and neighborhood concerns.  Newton is becoming a town that is unaffordable to most people.  Single-family homes under 500,000 no longer exist here.  Areas that were once inhabited by working class immigrant families are being scooped up by upwardly mobile yuppies and new immigrants.  Will this change the fabric of Newton?  It already has, in ways good and not so good.  Like it or not developers are paying more money for homes than end users.  Is it right to deny seniors the opportunity to make the most amount of money possible to supplement their retirement?  Is it right to say yes to one tear down and no to another simply because too many teardowns are occurring and the feel of the neighborhood is changing?  Remember after waiting one year the owner has the right to tear down his home and build the ugliest house possible if it meets zoning and set back guidelines.  I have to believe that we can do more to promote good will among neighbors.  I think the Historic Commission has a responsibility to promote harmony not discord.   Humans don’t like change but we can’t stop progress simply because change is hard.  I’m sure it was incredibly hard when the Mass Pike tore Newton in half.  However, can we deny that the convenience the Mass Pike offers is part of the appeal of Newton?   I look at my neighborhood and I witness incredible change, some I like and some I don’t.  The most valuable thing I have learned in the past 20 years is not to pass judgment until the project is completed.  Most often, once the house is landscaped it fits in.  Maybe we should require a landscaping plan to go along with architectural plans.  There is certainly more we can do to keep moving forward in a thoughtful way without creating so much tension between neighbors.

 

The Tear Down Conundrum


The Tear Down Conundrum

Newton, MA.  Realtor  Sotheby’s Newton, MA  July 28, 2014

for sale sign

 

 

Last week I had the unfortunate experience of attending a Newton Historic meeting.  A client purchased a house on the south side of Newton.  The house is an average home built in 1959 in a modern style.  By today’s standard the house doesn’t really work.  The bedrooms and baths are very small and closet space is lacking.  The kitchen is a small box with the original appliances.  The oven is sooo cute but has the capacity of an easy bake oven.  The yard is very large and flat and the lot size is well above average for Newton.  The client brought her contractor to the house and the contractor said it would actually cost more money to renovate and expand than tear the house down and build new.  The couple was undecided if they wanted to tackle a new house design and build but decided we should start the process in case that was the route they wanted to take.

We asked the seller to apply for a demolition permit to speed the process along.  Any structure that is more than 50 years old requires a historic review.  Often times this is just a formality.  The staff member pulls the building jacket and digs around to find the history of the house and the neighborhood.  The applicant must bring pictures of the exterior of the house from all angles and the surrounding properties.  After reviewing the pictures, considering the findings presented and listening to the neighbors object to every request, someone on the commission makes a motion, someone else seconds and the commission votes.  The choices are Preferably NOT Preserved or Preferably Preserved.  Not preferably preserved gives the owner the green light to proceed with demolition.  Preferably preserved comes with a one year delay in tearing the home down or in special cases an 18 month delay.  After one year, the owner can tear the house down at will!  As far as I can tell most people in the audience were not aware that once the owner waited out the year they could build ANYTHING as long as it met with zoning guidelines.

Personally, I am not advocating for more or less leniency regarding teardowns.  I was appalled at the rudeness and lack of respect 2 members of the commission displayed.  I did get the sense that these two members had little regard for what was brought forth and had already made up their minds.  What I do know is that every neighborhood changes and evolves.  I am sickened by some of the ugly cookie cutter homes that builders put up with no thought to the lot or neighborhood.  Nevertheless, people do buy these homes and I do not think we should be legislating taste.

I am in complete agreement with the zoning changes implemented in 2011 to prevent monstrosities from being built on tiny lots.  I am perplexed why some permits are granted and some are not.  I get the feeling neighbors get upset that their neighborhood is changing and go to these meeting to fight for the status quo.  I understand they are afraid that the new owner will build a hideous house and cause a disruption on their street.  What I would like to see more of, is neighbors working with neighbors to create a home that brings a 21st century vibe while the new construction improves the whole neighborhood instead of sticking out like a sore thumb.

There was one particular case at last week’s meeting.  A home was purchased in April and some serious problems came to light, the owners thought it was more prudent to build new than fix the many structural problems they encountered.  The owners hired an architect who designed a more current larger version of the old house but still worked beautifully with the neighborhood.  The neighbors loved the house and were supportive of the demolition.  In another case I was taken aback by neighbors’ objections to a  house being taken down because the foliage was so special.  I kid you not – the discussion dragged on about his “beautiful” foliage which consisted of rose bushes hanging over a chain link fence.  Many neighbors concerns revolved around the fact that there are too many development projects and the feel of their neighborhood is changing.  My answer to that is time does not stand still.  This is the perfect opportunity for the developer/owner to work with the neighbors to design a house that works with the surroundings.  It can be done and has been done…attend a special permitting hearing and you’ll be flabbergasted about your own neighbors’ behavior.  You’ll want to lock up your kids and dog and pray they don’t own a gun!

Yikes!

Yikes!

I am torn between property rights and neighborhood concerns.  Newton is becoming a town that is unaffordable to most people.  Single-family homes under 500,000 no longer exist here.  Areas that were once inhabited by working class immigrant families are being scooped up by upwardly mobile yuppies and new immigrants.  Will this change the fabric of Newton?  It already has, in ways good and not so good.  Like it or not developers are paying more money for homes than end users.  Is it right to deny seniors the opportunity to make the most amount of money possible to supplement their retirement?  Is it right to say yes to one tear down and no to another simply because too many teardowns are occurring and the feel of the neighborhood is changing?  Remember after waiting one year the owner has the right to tear down his home and build the ugliest house possible if it meets zoning and set back guidelines.  I have to believe that we can do more to promote good will among neighbors.  I think the Historic Commission has a responsibility to promote harmony not discord.   Humans don’t like change but we can’t stop progress simply because change is hard.  I’m sure it was incredibly hard when the Mass Pike tore Newton in half.  However, can we deny that the convenience the Mass Pike offers is part of the appeal of Newton?   I look at my neighborhood and I witness incredible change, some I like and some I don’t.  The most valuable thing I have learned in the past 19 years is not to pass judgment until the project is completed.  Most often, once the house is landscaped it fits in.  Maybe we should require a landscaping plan to go along with architectural plans.  There is certainly more we can do to keep moving forward in a thoughtful way without creating so much tension between neighbors.

 

Earning the Trust of Seniors in Real Estate Transactions


Earning the Trust of Seniors in Real Estate Transactions   Newton, MA.  Real Estate  Sotheby’s Realty Newton, MA.

 

Senior real estate picture

Last year my 87-year-old mother-in-law decided it was time to go to an Independent Living Community.  She had a few falls, which resulted in a broken hip from one fall and broken ribs from another.  We tried to convince her that living alone was no longer a viable option but she would have none of it.  One day I said to her wouldn’t you rather go on your own terms, pick the place you are going to live instead of us deciding?  A few weeks later she decided to take the plunge, but bear in mind this conversation had been ongoing for well over a year.  My husband and I went down to NJ and visited a few places that she knew about.  It’s amazing how you know as soon as you walk in the door!  It also didn’t hurt that her 91-year-old “friend” lived in this complex.

We met with management and we were shown a few apartments.  She already knew which building she wanted to live in and why so that was a huge help.  After the viewings as they were called, (seemed like a term for a wake to me) we were led back to an office.  I want to caution you here – make sure you or your parents understand that this is a hard sell!  My mother–in– law is no slouch but wow, she was flustered.  This is a buy in option Independent Living so the dollars we are talking is not chump change.  My mother-in-law wanted a specific apartment we saw and she was pressured into making a decision right there to secure her apartment.  We told mom that we would go to lunch and talk it over and come back in 2 hours.  Since they had no viewing appointments scheduled we thought it was unlikely that ‘her” apartment would be gone.

Mom took the apartment, has moved in, and loves it!  She says she was sorry she hadn’t done it sooner.  She also says she never could have made the move without us.  Mom is fortunate that she could buy her new place without having to sell her current condo.  Since I have lived in Boston for 20 years I didn’t know a Realtor in Morristown, NJ but the Independent Living Community recommended a Broker for mom.  The Realtor showed up at the appointed time, took as mom said, the nickel tour, and immediately whipped out her measuring laser!  As she was relaying this story to me, I was dumbfounded!  Mom said she was very efficient!  She brought her into the kitchen and handed her a contract to sign before she even did an analysis.   She told her that they would fill the price in later.  I was so relieved she didn’t sign!  When I asked her if she liked the broker she kept saying that she was very efficient and seemed capable.  I pressed further do you trust the broker?  The truth was she didn’t, she said there was something pushy about her as if she just assumed she would be selling the condo.  I told her to sleep on it but that she should interview other brokers.  I made a call to the manager of an office in Morristown, told him where Mom lived and her personality.  He immediately mentioned a Broker: Maggie Sellers.

Maggie went over to meet with mom and they hit it off beautifully.  Maggie understood mom’s needs and most importantly knew the neighborhood, the complex and the town.  Maggie had the analysis in 36 hours, she went over and sat with mom to make sure she understood the comps and how she came up with the price.  It was now 5 days since pushy broker came and mom still didn’t have the analysis.   Mom called pushy and was told she was a busy broker and highly respected by the Independent Living Community and she should be assured that she would get to her, her house would be sold and she should relax!  What?  After 10 days pushy dropped the analysis in the mailbox!  It was considerably higher than Maggie’s analysis.  I had Maggie and pushy e-mail me their comps and tried to figure out the discrepancy.  I have not lived in NJ for 20 years and I never lived in Morristown but it took me two minutes to figure out the problem.  Pushy used comps that weren’t comps for mom’s unit.  She used new construction and single-family homes along with similar condos  There had been enough sales in Mom’s complex in the past 6 months and there were two units currently listed.  Pushy did not understand the market or didn’t think she needed to.  After all she is the recommended broker for the Independent Living community for sellers in the greater Morristown area of which she gives 25% of her commission back to the IL Community not to the seller!

The point is mom felt an immediate connection with Maggie.  Maggie asked  mom if she could involve me in the process.  Maggie had worked with seniors and had an elderly mother of her own.  Maggie cared about her; Maggie had a list of people who bought items that the children didn’t want.  (My basement is loaded with china and silver that she hopes her grandchildren will want.)  Maggie recommended movers, and when an unknown problem was revealed at the inspection, she had trusted people to remedy the problem.

I asked Mom what she liked about Maggie and she was very clear.  While she felt the other agent was competent and successful, she didn’t necessarily think that they were a good fit.  She said she probably would have hired her if I had not gotten involved because she did not know any better.  She had a list of what she liked about Maggie.

  1.  Asked Me what I wanted
  2. She was prepared and did what she said she would do
  3. Treated me like an adult who was still capable of making decisions
  4. She wanted to introduce herself to my kids
  5. Let me make the final decision
  6. Had a list of companies to help facilitate the move and she had already vetted them
  7. Thoroughly explained the process without rushing me to sign paperwork
  8. I LIKED HER

                                                               

As a Realtor serving seniors, it is important that I understand that what makes a great partnership is in the eyes of our clients.  If you are not comfortable, there are many agents out there who will make you comfortable.

 

A good Realtor will make the process about you  and your needs.independt living pictureas

 

 

 

 

 

 

 

Newton Real Estate: More Good News!


Newton MA. Realtor, Newtonmasshomesforsale.com

 

The Newton real estate market is definitely humming.  The average number of homes sold August 2011 vs. August 2012 is up 18% and the median sale price for the same time period is up 13%!

This is a simple supply and demand business….seller’s — inventory is very low.  Call me or e-mail to see what your home will garner in today’s market!  617-921-6860  margaretszerlip@gmail.com

August 2011

67 Sales

$905,000 Average List price

$877,000 Average Sale Price

$760,000 Median Price

 

August 2012

81 Sales

$1,168,000 Average List Price

$1,111,000 Average Sale Price

$875,000 Median Price

Mortgage Rates…..Best Ever!


Newton, MA.

Mortgage Rates: Path Paved

Mortgage rates improved last week amidst an atmosphere of major market uncertainty.

It wasn’t until Friday though, after exceedingly weak economic data, that consumer borrowing costs really rallied. This surprising positive development followed 10 straight sessions of unfriendly directional behavior. All of that negativity was essentially erased on Friday, leaving rates just above their best levels of the year.  CHECK OUT THE CHART

The rally didn’t end there though.  Over the weekend our nation’s political “leadership” finally put aside partisan opinions and came to an agreement on a long-term budget plan. Combine that with another round of unexpectedly weak economic data this morning and we’re looking at new 2011 consumer borrowing cost lows.

CURRENT MARKET*: The BestExecution conventional 30-year fixed mortgage rate has improved to 4.50%. Some lenders are even offering 4.375% but that quote carries with it additional closing costs.  On FHA/VA 30 year fixed BestExecution is 4.375% with some lenders willing to go as low as 4.25% (extra closing costs).  15 year fixed conventional loans are best priced at 3.75%. Five year ARMs are best priced at 3.25%. It’s important to point out an increased amount of variation in what individual lenders are quoting as their BestExecution rates.  This is a factor of volatility in the secondary mortgage market.  Unfortunately when volatility picks up in the secondary mortgage market, the cost of doing business get more expensive for lenders (hedging costs go up as lock desks peel off coverage at higher MBS prices). Those added costs are usually passed down to consumers.

THE WEEK AHEAD: With drama dying down over the debt ceiling debate and a U.S. default off the table, markets are ready to shift their attention back to economic fundamentals, which have been generally supportive of lower mortgage rates lately.  And while plenty of indicators do have the potential to improve the overall economic outlook,  they’re more than likely going to confirm a dour situation and keep a lid on rising mortgage rates. The most influential data-point of the week comes on Friday morning, with the release of the July Employment Situation Report. CHECK OUT THE FULL ECON CALENDAR

PREVIOUS GUIDANCE:   Floating in this environment is a crapshoot. Both stocks and bonds are maneuvering through major market uncertainties. Investors are focused on news headlines regarding U.S. budget issues, EU debt contagion concerns, economic data, and quarterly earnings. That puts the direction of mortgage rates at the mercy of factors that don’t exactly adhere to schedules or expectations. While we still view underlying economic fundamentals as being supportive of lower mortgage rates in the future, the short-term risks associated with a potential U.S. debt default leave us more inclined to advise locking, especially deals that must be ready to close in the next 10-15 days. This provides protection from rising rates and still gives your lender a chance to negotiate if rates decline.

NEW GUIDANCE: Floating in this environment is still a crapshoot, especially in the short-run,  but barring an unexpected turn of events on Capitol Hill, a path has been paved for our longer-term mortgage rate outlook to come true. That means we see lower mortgage rates in the not so distant future. It may not be a direct path lower though, there will be ups and downs along the way. Be prepared for continued volatility.

CAUTION: MND guidance is speculative in nature. We don’t have a crystal ball, we can’t predict the future, we can only share our outlook. Making the following considerations extra important……………………

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

—————————-

*BestExecution is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their “breakeven analysis” on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The BestExecution loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the “perfect borrower” category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. “No point” loan doesn’t mean “no cost” loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don’t forget the fiscal frisking that comes along with the underwriting process.

Fitch Downgrades 9 Mortgage Providers….No Surprise Here


As a Realtor in Newton, MA, there is no surprise here…with BOA the worst offender, in my opinion!
Friday, June 10th, 2011, 3:54 pm

Fitch Ratings downgraded ratings on nine mortgage servicers because of tougher regulations and the lack of urgency these companies displayed in response to the foreclosure crisis.

The credit rating agency took action on two Bank of America (BAC: 10.80 +1.41%) servicing divisions of, twoWells Fargo (WFC: 26.275 +0.21%) servicing divisions,JPMorgan Chase (JPM: 41.05 +0.17%), Citigroup (C: 37.92 +0.40%), MetLife Bank (MET: 40.91 -1.80%),PNC Bank (PNC: 59.07 -0.12%) and SunTrust Mortgage (STI: 25.18 -1.37%).

Home Price VS. Cost


Home Price vs. Cost

Unless buyers are paying all cash, a potential purchaser should consider the COSTof a home more than the PRICE of a home. Obviously, the price is a major component of cost. However, mortgage rates and other expenses associated with attaining a mortgage also impact cost – what the buyer will pay every month. Interest rates and other mortgage expenses are projected to increase later this year.

2011: The Year a House Becomes A Home


2011: The Year a House Again Becomes a Home

  • For almost a decade now, every time we talked about real estate we immediately discussed money. We didn’t talk about the value of a home but instead about the price of the house. We didn’t worry about a roof over our heads but instead the ceiling on our interest rate. We didn’t care as much about where we raised our family as we cared about how much we increased our family’s net worth.

That will change in 2011. KLK Sotheby’s believe very strongly that real estate will return to what it has been for the 200+ year history of this country: a place for us and our families to live comfortably. It will also prove to be a great long term investment as it always has been.

Our parents and our grandparents didn’t buy their homes as a short term financial investment. They bought it so they had a place of their own to come home to at the end of the day; a place to raise their family; a place they could feel safe.

Sure they dreamed of a ‘mortgage-burning’ party. They realized it was a form of forced savings. They were taught that, if they paid their mortgage every month, they would wind up with a little retirement account decades later.

And, they realized that wouldn’t happen if they rented.

However, in the last decade, we somehow forgot that the financial aspect was the serendipity not the major reason to buy. We believe that 2011 will be the year that people return to the historic reasons families purchased a home. This is the year when we again remember that homeownership is a major part of the American Dream.

What about the challenges to a housing recovery? Let’s look at them.

The Economy

Most reports are showing that the economy is doing better than expected. This shopping season provided additional proof of this point. As the economy recovers, so will consumer confidence. This will be great news for housing.

Unemployment

There is much talk about a ‘jobless recovery’. We agree that unemployment will continue to be a challenge. However, when you talk about housing, it is not the unemployment rate that is all telling. Instead, it is the change in the rate. As unemployment skyrocketed, people started to worry about their own job. Any change creates concern. Unabated concern turns to fear. Fear causes paralysis. The spike in unemployment has plateaued. People no longer have the feeling that ‘they are next’. The fear will diminish and people will start moving on with their lives. This too will be great news for housing.

Interest Rates

It seems the bottomless pit in which rates have been falling does have a floor after all. And it seems we have found it. Those purchasers who had been waiting for the best interest rate may have already missed it.

Prices

Economists are projecting that prices will not see any appreciation in 2011. Sellers who had been waiting for 2006 to return will come to the realization that waiting any longer makes little sense. They will instead decide to get on with their lives and sell this year.

Prices probably will soften further. However, the possible savings to potential buyers will be minimized by a rise in interest rates.

Bottom Line

This is the year that normalcy returns to real estate. People will buy and sell based on the desire for a better life for themselves and their families. They will realize that is the true value of homeownership and they will be willing to pay for that value.

 

CAN RATES GO DOWN ANYMORE?


Another informative post my friends at KCM….

Can Rates Go Down Any More?

by DEAN HARTMAN on OCTOBER 21, 2010 ·

I agree with Dean that rates will go down for a time, maybe six months, but the reason is to get American products to look cheaper.  Congress is through helping the housing market, and in some ways I believe it should not be artificially propped up.  Eventually rates will rise because a sustained period of a weak dollar will not help the overall economy.

It appears they CAN and that they WILL. The buzzwords today are Quantitative Easing. It is another of the weapons the Fed has at its disposal to impact the economy, as a whole, and interest rates in particular.

Let me explain. In so far as the Fed has already lowered the rates they charge to lending institutions as much as they can, and they still see a sluggish economy with weak employment numbers and growth, the Fed appears ready to enter a second round of Quantitative Easing (QE). QE is when the Fed begins to buy Mortgage Backed Securities in earnest. They do that by paying more than the market price for MBSs; therefore, pushing interest rates lower.

But why do it? I mean rates are historically low already. Is lowering rates another quarter or half percent going to get someone to buy a house that hasn’t already gotten off the fence? Maybe, but I can’t see the number of people deciding to buy at 4% rates being that significant as compared to those looking to buy at 4.5%. There HAS to be other reasons. Maybe….

  1. The Fed realizes that lower rates will stabilize home prices. Lower rates mean borrowers can borrow more money based on their income, enabling them to pay more for a home which can slow the decline of prices, stabilize prices, and in a few areas even raise prices of homes.
  2. The Fed needs to look like they are doing SOMETHING to energize the economy or get consumer confidence turned around.
  3. The Fed has an agenda other than lower mortgage rates. Maybe the Fed is using the lowering of rates, in an effort to devalue the US Dollar abroad. By lowering the value of the dollar, our products become a better bargain to buyers overseas. So, maybe, just maybe, this is actually an attempt to kick start the economy. If we sell more products overseas, we need to produce more products, hire more employees to make, sell, and distribute those products. Can I smell job growth through QE?

Understand that a weakened dollar will eventually force rates to move up (to re- strengthen the dollar); so, there is going to be a window of even more incredible mortgage rates, but, the window will need to be carefully watched because it can’t be left open forever.

There is no history we can point to predict if QE can or will work. Nor is there any real indication of the level of aggressiveness the Fed will take in this area. (Listen to the rhetoric between now and next week’s release of the Fed’s Beige Book as hints.) It may just be another shot in the dark, but personally, I am in favor of ideas that promote job growth more than government hand outs and bail outs.