Deflating an investor-fueled recovery?


Mortgage interest rates are rising, up to 4.38 percent, according to Zillow. How might this affect the housing recovery? This press release from the Mercatus Center offers one opinion:

 "The Case-Shiller home price index went up more than 12.1 percent nationally from April 2012 to April 2013, with some markets showing record gains. However, the housing market could start to cool off with some investors already cutting back on real estate investments.

"Mercatus Center senior scholar Anthony Sanders — a former Deutsche Bank economist — said that today's report does not yet show the impact that rising mortgage interest rates could have on the housing market. 'At first glance this looks fabulous, but if you look behind the magic curtain, what you’re seeing is an investor-fueled (housing) recovery.

" 'Once the investors pull out, there is nothing left behind. When rates go up, you might get a temporary surge of people wanting to lock in lower rates while they can. But with credit so tight, it’s not clear that’s going to happen.

" ' The potential impact of rising rates will be reflected in tomorrow's report on mortgage purchase applications. For right now, we are in uncharted waters with the Fed, and we really don’t know how investors and consumers are going to behave with the rate shock.' "

Harold Bubil

Recipient of the 2015 Bob Graham Architectural Awareness Award from the American Institute of Architects/Florida-Caribbean, Harold Bubil is real estate editor of the Herald-Tribune Media Group. Born in Newport, R.I., his family moved to Sarasota in 1958. Harold graduated from Sarasota High School in 1970 and the University of Florida in 1974 with a degree in journalism. For the Herald-Tribune, he writes and edits stories about residential real estate, architecture, green building and local development history. He also is a photographer and public speaker. Contact him via email, or at (941) 361-4805.
Last modified: June 25, 2013
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