A: Last week, the Fed announced another anticipated interest rate cut, the third since July, and again by a quarter point adding to the 1.5 percent to 1.75 percent range.
The Fed will continue to watch the economic landscape, which it says has a strong labor market and activity that has been rising at a moderate rate, and expects to proceed as planned to sustain growth.
“We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the state of the economy remains broadly consistent with our outlook,” Federal Reserve chair Jerome Powell told reporters.
He also said that there could be a shift in future policy that would pause interest rate cuts.
According to a new Fed rate survey, 71 percent were in favor of a cut before the decision was made and 57 percent believed it would benefit the economy. The report suggests the rate cut will not significantly impact loan originations and housing purchases, as historical data shows the Fed’s rate hikes have more influence than interest rate cuts.
Though it might seem surprising, housing purchases increase with rising interest rates. The cuts, though, increase confidence in the economy.
I feel this is good news for the housing market, at least for the near future.
Q: Will it be a buyers’ or sellers’ market in 2020?
A: I would consider 2020 to be a balanced market. Prices remain quite high and inventory is still a little tight, so buyers can take advantage of lower interest rates and sellers can take advantage of the fact that inventory is still low.
According to a National Association of Realtors survey, 63 percent of buyers feel optimistic. As for confidence, 52 percent believe the economy is stable.
The association anticipates 2020 to continue to shift away from a sellers’ market, especially if the gross domestic product (GDP) slows and inventory ticks up.
If the property is priced right, it can still be a sellers’ market. Appreciation will still occur at the lower price points. As people look at the limit on tax deductibility of mortgage interest, state and local taxes and property tax, the upper-end price projection is less optimistic. On the lower end, demand will remain solid, given that we have low rates and job creation.
People buy homes because they’re both an investment and a place to live. Right now, if you find a property and bargain aggressively to get a good price, you should move there and stay for a long period of time. Then enjoy your home.
Send your question and look for your answer in a future column. Email Lynne@LynneFrench.com. Contact her at 925.672.8787 or stop in at 6200 Center St., Clayton.