Just this week the Federal Reserve Board raised short-term interest
rates by a quarter of a percent. both the mortgage market and the stock
market had anticipated this rate increase so there wasn't any dramatic
reaction to it.
What was unusual this week was the fact that the Federal Reserve Board
announced that it was going to raise short-term interest rates at least
three more times in 2017.
Actually the interest rates which have been kept artificially low have
been increasing prior to the election and anytime the economy shows
strength, usually interest rates start to move up and this is definitely
a damper on real estate activity. But, it’s really a double-edged sword
because an improving economy and more job creation, increases housing
demand.
So far, in 2016 San Diego real estate has shown double-digit
appreciation! But, now with interest rates starting to move up, a new
president about to take office, and San Diego real estate at a 10 year
high, will 2017 see a continuation in our very strong local housing
appreciation or will our home prices remain stagnant because of rising
interest rates and are high affordability factor?
Now, no one can
really accurately predict the course of any financial market. But, it's
prudent to get the views of real estate insiders so you can then
determine your own outlook and what actions you might take to increase
or maintain your Southern California lifestyle.
Here in San Diego on a number of radio channels I personally heard
commercials for investing in real estate trusts.
These REITs that are
being pushed in the commercials are based on commercial properties. This
fact in and of itself would not be of major concern if I didn’t know
about the other underlying problems in the commercial real estate
market. But, personally don’t ever recall REITs being advertised on our
local San Diego radio stations. I believe this type of radio advertising
for REITs could mark the top of the expected bubble in commercial real
estate next year.
Keep in mind this is just my personal opinion
and naturally before you act on any major investment, whether real
estate or stocks and bonds, it would be prudent to consult with your own
financial and legal advisors..
