Make us your home page
Instagram

Fed may have limited effect on real estate

WASHINGTON — The Federal Reserve's ambitious new effort to aid the recovery by aiding the housing market is likely to have a modest effect on sales, given the pervasive weakness in the economy and real estate market, experts predicted Friday.

"The incremental benefit of slightly lower mortgage rates will be small," Paul Diggle, a property economist at Capital Economics, wrote in a note to clients.

"After all, most borrowers in a position to refinance have probably already done so. And it's not obvious why a would-be buyer who wasn't tempted by a 3.7 percent mortgage rate would be by, let's say, a 3.25 percent rate," he wrote.

Other analysts echoed that analysis, saying that the Fed program would help the housing recovery at the margins, but that even lower mortgage rates would not in and of themselves spur a strong turnaround.

On Thursday, the Federal Reserve announced a third, major round of asset purchases intended to speed up the stalling recovery, bring down interest rates and increase employment.

The Fed is now aiming at the unemployment problem by purchasing mortgage-backed securities at a pace of about $40 billion a month for an indefinite period.

The effort will increase prices and demand for those mortgage-backed securities and push down mortgage rates, already near their historical lows. That might encourage more families to refinance or purchase a home.

Analysts said it might help strengthen and quicken an already existing, but tentative, housing recovery. In recent months, housing prices have bottomed out in many markets. Home sales have ticked up. Builders have broken ground on more new projects.

On Thursday and Friday, financial markets cheered the Fed's announcement. Stocks climbed, as did the price of many of the mortgage-backed securities the Fed vowed to buy.

Fed may have limited effect on real estate 09/14/12 [Last modified: Friday, September 14, 2012 10:27pm]
Photo reprints | Article reprints

    

Join the discussion: Click to view comments, add yours

Loading...
  1. Pinellas licensing board asks Sen. Jack Latvala for $500,000 loan

    Local Government

    The troubled Pinellas County agency that regulates contractors wants Sen. Jack Latvala to help it get a $500,000 lifeline from the state to stay afloat.

    State Sen . Jack Latvala, R- Clearwater, is being asked to help the Pinellas County Construction Licensing Board get $500,000 from the state so it can stay open beyond February.  [SCOTT KEELER   |   Times]
  2. In advertising, marketing diversity needs a boost in Tampa Bay, nationally

    Business

    TAMPA — Trimeka Benjamin was focused on a career in broadcast journalism when she entered Bethune-Cookman University.

    From left, Swim Digital marketing owner Trimeka Benjamin discusses the broad lack of diversity in advertising and marketing with 22 Squared copywriter Luke Sokolewicz, University of Tampa advertising/PR professor Jennifer Whelihan, Rumbo creative director George Zwierko and Nancy Vaughn of the White Book Agency. The group recently met at The Bunker in Ybor City.
  3. Tampa Club president seeks assessment fee from members

    News

    TAMPA — The president of the Tampa Club said he asked members last month to pay an additional assessment fee to provide "additional revenue." However, Ron Licata said Friday that the downtown business group is not in a dire financial situation.

    Ron Licata, president of the Tampa Club in downtown Tampa. [Tampa Club]
  4. Under Republican health care bill, Florida must make up $7.5 billion

    Markets

    If a Senate bill called the Better Care Reconciliation Act of 2017 becomes law, Florida's government would need to make up about $7.5 billion to maintain its current health care system. The bill, which is one of the Republican Party's long-promised answers to the Affordable Care Act imposes a cap on funding per enrollee …

    Florida would need to cover $7.5 billion to keep its health care program under the Republican-proposed Better Care Reconciliation Act of 2017.  [Times file photo]
  5. Amid U.S. real estate buying binge by foreign investors, Florida remains first choice

    Real Estate

    Foreign investment in U.S. residential real estate recently skyrocketed to a new high with nearly half of all foreign sales happening in Florida, California and Texas.

    A National Association of Realtors annual survey found record volume and activity by foreign buyers of U.S. real estate. Florida had the highest foreign investment activity, followed by California and Texas. [National Association of Realtors]