The big news in real estate — and across the financial sector — in December was the Federal Reserve’s decision to slightly increase short-term interest rates for the first time since 2008. The increase will hardly be felt — if at all — by homebuyers at this point. But the move, however slight, signals sustained growth of the economy that can outpace the quarter percent increase in borrowing rates.
Meanwhile, home sales figures from November flowed in. And they showed that sales had cooled off significantly nationwide, and just a bit in Austin. Perhaps the biggest factor in that slowdown was the inception of a new law that is designed to give consumers more useful information when borrowing money. While it may be offering new insight, it’s also slowing down the closing time on home deals as lenders, borrowers and real estate agents get used to the new information.
Here’s a look at some of December’s most important real estate news.
The Fed Interest Rate Hike
Ever since 2008 when the housing market crashed, people buying homes have enjoyed some of the lowest interest rates on records. And that lower rate has no doubt helped more Americans afford the home they want, as housing sales have risen and the economy has rebounded, albeit a little slower than most of us had hoped. Home sales climbed from 4.6 million in 2011 to 5.4 million in 2014 and an anticipated 5.7 million this year.
In December, the Federal Reserve increased the short-term borrowing rate slightly — by a quarter percent. That’s unlikely to have a major impact on the housing market, analysts say. But the Fed has signaled it will continue to increase the rate slowly over the next year or so, likely reaching a 1 percent increase. If that happens, the rate on a 30-year mortgage could tick up by a couple tenths of a percent. That said, credit card rates and home equity loans may feel an impact immediately because those variable rates and respond quickly to the Fed’s moves. Learn more about the potential impacts of the rate hike in this Wall Street Journal article.
Austin on Track for a Record Year in Home Sales
Talk about a banner year. Austin’s real estate market has been exceptionally active this year. And the area is likely to record even more home sales in 2015 than it did in 2014, when the market was also red hot. The faster pace of sales comes as home prices have risen steadily over the past few years, setting new records for average and median prices almost every month. The Austin area’s median price hit $270,000 in November — a 10 percent increase from the same month in 2014. The activity has been a boon for homeowners who decide to sell because, in most cases, they can sell their homes for a lot more than they paid years ago.
Nationally, Home Sales Cooled Off in November
Home sales across the nation appear to have cooled off in November, leading to the lowest number of sales in about a year and a half, according to the National Association of Realtors. Home sales, including condos and townhomes, declined by 10.5 percent in November. But industry leaders say at least part of that slowdown can be attributed to longer closing times tied to new federal rules designed to make lending more transparent to home buyers. The median price, across the country, reached $220,300 in November. That’s a 6.3 percent increase from the same period a year ago. The nation has now seen 45 consecutive months of median prices increasing. Learn more details in this Barron’s article.
Jersey City’s Skyline Grows
Sure, Jersey City is overshadowed by the huge Manhattan skyline. But the city is growing upward with the addition of a new 53-story tower, adding to the Jersey Square mixed-use development. From the top of the new tower, you can see the Statue of Liberty, Downtown Jersey City, the Pulaski Skyway, One World Trade Center and the rest of Manhattan, according to this NJ.com story. You can even see a bit of Pennsylvania.