Interest Rates, Stock Market and Sedona Real Estate Market
Things that affect the Sedona real estate market right now. Stocks, interest rates, election cycles, oh my!
This past week has been quite a ride with the stock market. How does that affect the real estate market?
Sedona AZ: Looking at the big picture (the macro view), stock downturns may very well bring lower interest rates, not just for the National real estate market but also for our local Sedona real estate market. We normally see a Presidential election as a slower time for the markets but this year has been better than any in memory. How the stock volatility plays into that, we'll have to see.
Mortgage rates are already at historic lows and we just might see them push farther down. It's up to the Fed but it wouldn't surprise me to see it tick farther down. When we had the recession in 2008 it tanked the stock market but it recovered fairly quickly, housing however did not and it impacted us for years. Many of the sub-contractors were suddenly out of work and it's been very difficult to recover those skilled tradesmen. A shortage of subs leads to higher prices for the work. It's been a defining reason why it remains more expensive to build a new home in Sedona than to buy an existing one. Even remodeling is a better value.
When Treasury bond yields rise, banks can get a higher interest rate for home mortgages. The Investors in securities that are mortgage-backed then can demand higher rates of return. Bonds and mortgages compete for low-risk or risk-averse investors who need a fixed income return. Keep an eye on the 10 and 30 year Treasury bond rates for an insight into what's coming up for mortgage rates.
Here's a great article on MarketWatch that goes into depth on Treasury bond rates.
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