History shows us that we don’t need to fear the recent spikes in mortgage rates because they won’t have an impact on home prices, according to Fannie Mae researchers in a new report.
Fannie Mae evaluated the trajectory of mortgage rates since 1990. Over the years, researchers have found that rising rates don’t hamper home sales and have no impact on home prices.
“History suggests that interest rate increases at the level recently witnessed will not stop the current housing recovery,” the report notes.
For example, the study found that from October 1993 to December 1994, mortgage rates rose from 6.8 percent to 9.2 percent. However, home prices leveled off and then only dropped slightly during that time.
From October 1998 to May 2000, mortgage rates soared from 6.7 percent to 8.5 percent and there was no impact found on home prices during that period, according to Fannie Mae.
“What we see through the ups and downs of rate changes is that sellers are reluctant to lower prices,” Mark Palim, who led the Fannie Mae study, told CNNMoney. Read more…
On January 1, both the Senate and House passed H.R. 8, legislation to avert the “fiscal cliff.” The bill will be signed shortly by President Barack Obama. Click here for a summary of important real estate related provisions in the bill.
When we look back on 2012 a long time from now, it may be viewed as the first year of the recovery, the year in which real estate reversed its course and moved in a more positive direction.
With that in mind, here are 13 reasons — courtesy of REALTOR® Magazine’s online news — why real estate pros can look forward to next year.
That’s not to say there aren’t challenges. Lending remains tight, there’s a large foreclosure backlog and regulatory challenges, and the fiscal cliff loom ahead. But on balance, real estate appears to have a bright future in 2013!
Beginning on January 1, 2013, people who lose their home to foreclosure will be required to pay federal taxes on any unpaid mortgage the bank can’t recoup through an auction. The same will be true for homeowners whose loan principal is reduced by a mortgage modification, with the wiped-out loan being treated as taxable income.
The new tax obligation will hit because the Mortgage Forgiveness Debt Relief Act expires at the end of 2012. The 2007 law was passed to save struggling homeowners from getting whacked twice, first by the sagging housing market and second by the Internal Revenue Service. Its expiration could push more people to remain in homes worth less than their mortgages, slowing the housing market’s recovery. Read more …