As a real estate agent, I am asked quite often what I think the market is going to do in the next year. Since my crystal ball is missing, I typically respond with ‘your guess is as good as mine.’ In any market, it is really hard to look far into the future with a clear idea of what is going to happen.
A major factor influencing real estate sales are interest rates, and where consumers think they are heading. This is why I asked Katie Rice with O’Dette Mortgage Group what she thought interest rates would do for the remainder of 2010, and if we are headed for inflation or deflation.
Rice handed me a few articles that clearly spelled out we are experiencing the early stages of deflation, a decrease in the general price level of goods and services.
‘Interest rates are going to stay similar for two to four months because of unemployment, and economic conditions in the U.S. and overseas,’ Rice said. ‘Everyone thought rates were going up when the government stopped buying mortgage-backed securities in March of 2010. Rates did not skyrocket, in my opinion, because European banks had a similar implosion and went through a stress test that we already went through. This will show that hopefully we (U.S. banks) are more stable,’ Rice continued. ‘I try to be optimistic but you have to look at everything … smart investors look at everything.’
~ Comment on this column online, visit moonshineink.com.
