Don’t Count Out the Real Estate Rebound Just Yet

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The June existing home sales report from the National Association of Realtors showed a pickup in sales to an annualized pace of 5 million for the first time since October of last year. According to Lawrence Yun, NAR Chief Economist, housing fundamentals are moving in the right direction with existing supply helping balance out the market. Even as the housing market improves and prices rise around the country, other economists are worried rising interest rates could derail the nascent recovery.

Regions Financial Chief Economist Richard Moody echoed most conservative views that “without a better pace of income growth, any increase in mortgage rates—assuming the much-anticipated increase in long-term interest rates actually materializes—will take a bite out of home sales.” Should rates stay low and buck expectations, Mr. Yun believes “inventories are at their highest level in over a year and price gains have slowed to much more welcoming levels in many parts of the country. This bodes well for rising home sales in the upcoming months as consumers are provided with more choices.”

Existing home purchases, which account for over 90% of all home sales, lost momentum in the middle of 2013 as interest rates spiked and prices surged. The harsh 2014 winter piled on more bad news, but interest rates soon marched back to 2013 levels boosting home sales during the crucial spring and early summer selling season. Falling unemployment rates nationwide also contributed to the recovery.

Both buyers and sellers have to watch near term Federal Reserve policy changes very carefully. Critics argue the Fed’s bond buying stimulus stoked the real estate recovery following the Great Recession, but may now possibly be keeping interest rates too low for too long. A faster than expected rise in mortgage rates would put an unwelcome damper on the already sub-par economic recovery dragged down by negative home equity, supply shortages of new construction, and stagnant wages.


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About William Stern

William, Managing Director in charge of business development and human capital, serves on the firm's executive steering committee. William's expertise in sales and organizational management has helped the firm exceed ambitious growth targets year after year. William is devoted to building infrastructure, eradicating inefficiencies, and developing new products and services that keep Cardiff a dynamic force within its markets. One of William's many initiatives has been to increase Cardiff's footprint across the US, penetrating new markets while building stronger relationships with current partners. Before joining Cardiff, William worked for TD Waterhouse as a Learning and Development Counselor for their burgeoning discount brokerage division. Following TDW, William held a key business development post in the Commercial Equipment Finance Division of a California-based leasing company helping to expand market share and annual sales through direct marketing to middle market companies seeking equipment financing and leasing. To learn more about capital markets, both foreign and domestic, William moved to the San Francisco Bay Area to pursue a career with Fisher Investments (FI) as an Investment Counselor in their Private Client Group. William received two degrees of Bachelor of Arts in Castillian Spanish Literature and Political Science from Revelle College at the University of California, San Diego.