Interesting Interest Rates

Will a lowering of interest rates spur housing activity? That is the million dollar question. While many of the potential home buyers out there waiting for the other shoe to drop (a national declaration that the real estate market has hit bottom) a word of caution. Some are waiting for the actual 'bottom' to occur, but the real problem is that we will not know when that day is since most of our data is historical. If one looks at the current interest rates compared to the history of rates since the 70's there are only a handful of times when the interest rates have been this low. What does that mean? It means that they will go up. They have to. The Fed is currently worried about the risk of inflation on our economy and raising interest rates is one of the tools that a concerned Fed can use to slow that monster. Lowering rates only encourages a higher risk of inflation. But with the housing slowdown reducing rates seems to be the effective tool for the moment to spur activity in the housing sector. Herein lies the rub. Buyers are waiting for that 'great low rate' and will probably miss it as the economy moves along. The good news for our real estate market is that we have not suffered like other parts of the country. We don't see the escalation of property values like California, Arizona or Florida. That does not mean that we have not seen our share of problems, but Wisconsin is doing well comparatively. With interest rates now below 6% and an ample inventory level I can not think of a better time to invest in Real Estate. A year from now some will be lamenting that they should have gotten into Real Estate. Oh well that is how it goes.