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Homes of Huntsville; Huntsville AL MLS Source You Magazine
You may have heard rumblings in the news lately about something called Quantitative Easing, or QE3 for short. If you're in the market to buy or refinance a home, this is one story to follow. Read on to learn why.
What is Quantitative Easing?Quantitative Easing is the concept of the Fed becoming a buyer of Treasuries and Bonds to try and stimulate the economy. Oftentimes, the Fed does Quantitative Easing when they are hoping to achieve the following things:
To create inflation and avoid a deflationary economy
To lower the unemployment rate
To boost Stock prices
Keep in mind that one of the consequences of Quantitative Easing is that the US Dollar will weaken. This makes US exports more affordable abroad, as well as makes imports appear relatively more expensive. This will help large multi-national companies???which have a large influence on the economy and the major Stock market indices???thus stimulating our economy and hopefully our Labor Market, which continues to struggle.
What Happened During the Last Round of Quantitative Easing (QE2)?It's important to understand that home loan rates are tied to Mortgage Bonds, and when Bonds improve, home loan rates typically move lower. History has shown that Bonds and home loan rates typically improve in anticipation of Quantitative Easing, but then worsen once the official announcement is made. Think about the old investing adage: "Buy on the rumor, and sell on the news."
In a speech delivered on August 27, 2010 in Jackson Hole, Wyoming, Fed Chairmen Ben Bernanke mentioned that QE2 may be coming, saying, "I believe that additional purchases of longer-term securities, should the FOMC choose to undertake them, would be effective in further easing financial conditions." But the Fed didn't take action and begin QE2 until November of that year. Bonds and home loan rates enjoyed a nice rally until the actual official announcement was made.
However, once QE2 officially began in November 2010, we saw a big move higher in Stocks. By the time QE2 concluded in June 2011, the S&P 500 had risen 19%. And when investors moved their money into Stocks during this time, Bonds and home loan rates suffered as a result.
The Bottom LineOn August 31st of this year, Bernanke was back in Jackson Hole, Wyoming delivering another Economic Outlook and Monetary Policy. While he did not commit to another round of Quantitative Easing or QE3, he hinted that one was possible.
If rumors of QE3 continue to swirl, we should continue to see great home loan rates leading up to any actual announcement.
But if the Fed decides to move forward with QE3 and Stocks rally like they did during QE2, the Stock rally could come at the expense of the Bond markets???which would in turn push home loan rates higher.
The great news is that home loan rates remain near historic lows, making now a great time to purchase or refinance a home. If you have any questions about your personal situation, or if you're wondering how you can take advantage of today's low rates, contact the person who supplied you with this month's issue of YOU Magazine. Homes of Huntsville; Huntsville AL MLS Source Gary Thomas, 2012 NAR President-Elect
Last week, I had the opportunity to attend the Republican National Convention along with 2012 NAR Treasurer Bill Armstrong and 2012 Vice President and Liaison to Government Affairs Scott Louser in Tampa, Florida. While everyone was nervous about Hurricane Isaac hitting during the convention, it didn???t dampen the enthusiasm for our message that Homeownership Matters to America!
The convention was an outstanding opportunity for REALTORS?? to meet and talk with GOP elected-officials and candidates about the important role that real estate plays in our economy.
We also saw how important it is for REALTORS?? to get involved in the political process. The week before the convention when the platform was being drafted, the committee overlooked including language about protecting the mortgage interest deduction (MID). Shirley Wiseman and April Newland, both REALTORS?? who were on the platform committee, for language that explicitly puts Republicans on record pledging protection of the MID, although it first gives a nod to the party???s priority to seek comprehensive tax reform. If that doesn???t pass, protecting the MID is paramount. It is an excellent example of REALTORS?? being at the right place at the right time.
The Real Estate Roundtable also hosted a panel discussion on the importance of a strong real estate market to creating a robust economic recovery. There were representatives from commercial, hospitality, multifamily, and architects to make the case. I had the opportunity to represent REALTORS??. Homes of Huntsville Our good friend and former REALTOR??, Senator Johnny Isakson was also a member of the panel. We talked about the importance of maintaining federal incentives for homeownership and ensuring that market-stifling high down payments are not the result of a narrow definition of provisions in the Dodd-Frank law. Huntsville AL MLS We all advocated for a broad definition of these provision, just as Congress intended. Senator Isakson was outstanding on the issue since he was involved in writing the language. The Real Estate Round Table will sponsor the same panel at the DNC convention, and 2012 NAR First Vice President Steve Brown will be representing REALTORS??. If you have a chance, Overall it was a remarkable experience, and I was proud to see our REALTOR?? involvement pay off at such a crucial moment.
Gary Thomas, 2012 NAR President-Elect
54 Responses to REALTOR?? Party Storms Grand Old Party huntsville al mls, Homes of Huntsville
The ???Grand-ol-Gop??? has a habit of feathering their own nest, ( and the ones who tag along with them ) without much regard for much of anything/anyone else.
Taxes are too complicated. It???s easy to get lost in the tax deduction trap. Let???s see???.You pay the govenment $1 in taxes and they give you 25 cents back as a deduction? Sounds like a good deal for the government. They gain 75 cents every time and you lose 75 cents every time.
Why would you need any deduction if there was NO tax in the first place? Now that???s TAX reform!
As I read this post, what jumped out to me was exactly the concern noted by Dick ??? Sep 5 ??? I really am starting to wonder what is the GOP ???vision??? for the future of this country. I beginning to suspect there is no ???vision??? ??? just mantra ??? (1) no tax and (2) no government ??? except to dictate to females.
Carl Halessays:
I personally think the importance of MID is very much overblown. First, there are many home buyers who do not pay any income taxes; secondly the difference in what they would pay without the deduction is not that great except for the very high income individuals. Most decisipons to buy are NOT based on MID>
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