Loffman Property Management has just won the Best of Rocklin for the 5th consecutive year! Starting last year we were honored to be in the Rocklin Business Hall of Fame.
Today (10/4/18) the stock market took a big hit and most analysts said it was because the yield on the 10yr treasury notes was on the rise. Yields almost hit 3.2%. The 10yr is seen as a reliable guide for a broad measure of interest rates, and in particular, rates that effect mortgage lending.
Two years ago the 10yr yielded 1.727% and the low was reached in July of 2016 at 1.321%. A year ago the yield was 2.368%. So, interest rates have been rising as the Federal Reserve has been gradually raising rates in an attempt to “cool” an economy that is growing at over 4% on an annual basis. When the economy was perceived to be weak, the Feds kept rates low, and some argued too low. Now, rates are moving in the opposite direction.
As rates rise, the cost of borrowing goes up, making mortgages less affordable. And, rates on adjustable mortgages also rise, as they are pegged to various interest rate indexes.
While this effects the real estate market, this trend may also effect the rental market. If some people are priced out of the mortgage market, they might decide to rent. So, this environment might put additional pressure on the rental market and cause rents to rise. It’s still about supply and demand.
The Federal Reserve has been raising interest rates this year and mortgage interest rates have been rising as well. This has been having an effect on the affordability of housing. One way to measure the health of the homebuilding industry is to follow the stock market symbol XHB – the SPDR S&P Homebuilders. This is an ETF (exchange traded fund) that one can purchase and track just like a stock. This ETF peaked in late January of this year and has been in decline ever since, although during the past couple of months the XHB price has stabilized. If interest rates stabilize here the market for new homes may stabilize as well. The XHB will tell the story.
Today (Aug 6th) we launched our new web site. Content is almost 100% identical to the older site, but the form is now modern and it automatically resizes to fit whatever device you use to view it. If you have any issues please feel free to send me a message and let me know what we can do to fix any problems or improve the site.