Real Estate Market Update
It's almost an understatement to say the real estate market has been unsettled for the past couple months. Just two factors contributing to this -- at the end of March the feds completed their $1.5T purchase of mortgage-backed securities (MBS) and then a month later, the tax credit ended at the end of April.
In the 1-2 weeks after the Feds exit from MBS purchases, Interest rates rose to 5.25% but in response to the financial problems in Europe, investors have gone back into dollars, pushing interest rates back down to near-record lows of 4.75%.
Home sales have also been up and down with foreclosure inventory up again in many cities as trial modification programs don't pan out for many distressed borrowers which over 6-12 months transforms the "shadow inventory" of defaults into actual bank-owned property.