Fed Eases Mortgage Stimulus, Rates Hold Steady

Federal Reserve will reduce amount spent monthly on Mortgage Backed Securities.

For just over 5 years, the Federal Reserve has purchased Mortgage Backed Securities (MBS) to the tune of $85 billion as part of the stimulus program enacted in Federal ReserveNovember 2008. Known as Quantitative Easing (QE), this purchase of bonds helped to shore up the real estate market by helping to keep interest rates low. QE gave confidence for investors because of the security the ongoing stimulus provided to the market.

Late last spring, the Federal Reserve hinted that they may eventually end Quantitative Easing due to marked improvements in the nation’s economy. Investors, nervous that they may no longer rely on the stimulus guarantee, initiated a selloff of MBS that caused mortgage interest rates to jump nearly a full percent. The Fed changed their course late in the summer, and QE continued without any changes.

Changes ahead, but how will they affect the real estate market?

On December 18th, the Federal Reserve announced they would reduce Quantitative Easing by $10 billion per month. Good news from an economic standpoint in that taxpayers will be saved $120 billion during the course of the year. So far, the stock market has reacted positively, with markets closing up since the news was announced. Interest rates have not been affected either…yet…but so far the outlook appears positive.

All of this seems to be good news to start the new year. November saw home prices in Santa Clarita the highest in five years, when values peaked just before the recession took hold. Overall we’ve seen significant gains in the housing market in 2012, and with the improvement of economic conditions, we should see continued gains into 2014. 

Home buyers and sellers should begin to make plans now!

If you’re considering selling your home, there is no better time to start than now. Homes in Santa Clarita are in high demand, and many that are on the market are receiving top dollar.

Did you hold off buying a home last year? Consider this: If you purchased your home in Santa Clarita at the beginning of 2013, the value on average would have increased nearly 24 percent! While we can’t predict just how much the market will grow by this time next year, we can say that making a home purchase is one of the best investments you can make.

Don’t let another year go by! Contact Team Avalos to find out how we can make  your real estate dreams come true.

Team Avalos Real Estate
Keller Williams VIP Properties
25124 Springfield Court, Suite 100
Valencia, CA 91355

Office: (661) 290-3743
Carlos direct: (818) 399-4093
Rose direct: (818) 590-2077

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