After a stronger 2013, the Fed’s bond buying, which has pushed down interest rates, may begin to slow. Consumer confidence and home prices are both up over last year, which indicates that the economy has and may continue to strengthen. As the Fed sees less need for monetary stimulus and reduces the number of bonds it purchases, mortgage rates will increase. The Fed has already reduced the volume of bonds it is buying each month. Last month, the number was reduced from $85 to $75 billion and Federal Reserve President Charles Plosser suggested that the amount may be further reduced to only $25 billion in the coming months.
Plosser is bullish about the economy. According to his statement in Reuters : “if the economy continues to grow and strengthen I think that there’s no reason why we shouldn’t want to consider speeding the process up [of reducing bond-buying numbers] if we can”. He has plenty of reasons to think so – housing prices and consumer confidence have both increased year-over-year. Consumer confidence rose sharply from 72.0 in November to 78.1 in December. According to the National Association of Realtors, existing single family home sales in the Northeast outpaced national numbers, increasing by 6% year-over-year. Housing prices followed suit, rising 9.4% on average since December 2012. All indicators showed that the market was stronger in 2013 and that trend looks to continue. Within Ridgefield, 2013 was a great year for buyers and sellers alike as sales volume and median sale price increased.
The implication of these changes is that now may be the best time to purchase a house for the foreseeable future. However, even if mortgage rates rise, they are already at historically low levels, meaning that it is and will continue to be a great time to buy. For more information about how the real estate market in Ridgefield affects you, sign up below to receive our 2013 Year End Market Report. The market is recovering well, and we have the expertise and network to help any client succeed.