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Are Lower Rates Increasing Demand? Not so fast.

Posted on Saturday, November 05, 2011

Florida REALTOR reported yesterday “The average rate on the 30-year fixed mortgage fell to 4 percent this week, nearly matching the all-time low hit just one month ago.” This is great news for a lot of reasons – cheaper money means affordability –  houses, projects, all sorts of things may make more sense to buy and start. But not so fast …

Housing demand is a function of many things. Cost of money sure. Consumer confidence – that elusive psychometric plays a significant role. What about the ability to sell your old place? What about using these “cheap rates”  to refinance your current debt and hold on to what you have now? What about the news real estate prices might still headed lower? All of these things and more weigh on demand.

The invisible hand of Adam Smith and some government actions are certainly lowering rates – a good thing – but in our view we need at least two things to make this market work again – some real confidence the Naples real estate market is headed higher and some continued decrease in the supply of properties in some Naples neighborhoods.  A little more demand – and although much improved – a little less supply will heat up the Naples real estate market again.

When will we know? Well as a good friend of mine likes to say “the future is already here, it is just unevenly distributed.” In some Naples real estate areas we do have rising prices, decreasing supply and increasing volume – in other Naples areas not so much. Our general feeling is things are improving – and this year is better last year for us – but what we need is a few more months of steady improvement.

In just over a week we will have the new Naples Area Board of Realtors (NABOR) October data in front of us – hopefully this will string together another month of improvement. Until then lower rates should help. Let’s hope other factors like confidence jump on board too.

Tell us what you think.

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No legal advice or suggestions are being given in this Blog and the writing of this Blog are intended for the sole use of our clients.

Mark Goebel, PA is a REALTOR with Coldwell Banker on 5th avenue in Naples, Florida with 35+ years of visiting and living in Naples. After 25 years at Accenture, Mark retired as a managing director and spends his time helping non profits and building a Naples real estate team with his wife Nan. Talk to Mark and Nan about life in Naples and why they chose this place to live full-time over all others.

Mark Goebel, PA
REALTOR
Mobile: 239.595.3921
Email: mark.c.goebel@gmail.com
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