A.D. Cantelmo Property Management
Our Business is Property Management in Orange County California
Do people understand how low interest rates are?
I was talking to a Realtor buddy of mine and I was asking
him how his listing was going. He said that he has been surprised at how slow
the interest has been, since the inventory is low and his listing is a very
nice home in a desirable area. Now I did not get into the particulars with him,
but the conversation started me thinking.
Rental Market booming
Being in the Property Management business, I know the rental
market is very strong, As I mentioned before, Raising rents seems to be no
problem and properties are rarely vacant for any period of time when they do
come up for rent. So why are so many people still renting when interest rated
are so low. I think I have a valid reason; most people who are in the age group
to buy a home have no historical understanding of how low interest rates really
are compared to years past.
When you look at the chart, you can follow where we are
today compared to 35, 25, and 15 years ago, but many people have no clue and since
they see no high interest rates in the future, they have little incentive to
purchase now.
Long term Rates
Long term low interests rates are a benefit to home buyers
when they buy, but I think what started out as an incentive to home buyers to get
them to go out and buy, has now turned into the new normal and people have no
urgency to go out and buy, because they have no fear of higher interest rates
in the future.
Loss of incentive
It reminds me of when I was a kid and we were going to visit
the San Francisco Zoo. I was so excited to see the Lions get fed. When we got
to the Lions area, they threw out big chunks of meat but the Lions did not even
get up to get the meat. I was so disappointed and my dad explained to me, that
the lions have gotten used to getting the meat everyday and they had no incentive
to get up because the meat will be there anytime they want it. The Lions lost
their animal instinct.
I think that long term low interests rates have removed the
instinct for buyers to take advantage, because they feel those rates will be
there when they want them. We will see if that is true or not, but if rates do
go up, there are going to be many very disappointed people who lost their
chance to buy at historical low rates.
A.D. Cantelmo Property
Management Specializes in Property Management in Orange County
Ca.