Real Estate moves in cycles.
One of the primary factors that influences these cycles are interest rates.
This is important because it should help determine which strategy to use in our investments.
So, What happens when interest rates are high?
1)lowers one's purchasing power, because monthly payments are higher.
2)Prevents some from qualifying for loans.
3)Causes many to default on loans with adjustable rate because payments are going up
Most don't plan on higher payments, increasing the amount of foreclosure.
So, what happens when rates are low?
1) easier to buy homes
2)increases purchasing power.
3) bigger bang for your buck.
4)easier to cash flow, because rate are lower
Rates directly affect the cycle the market is heading into.
One way to help determine the the current cycle and the direction it may be heading is to ask your lender some questions.
1) where are rates now?
2) where were they 6 months ago?
3) where were they 18 months ago?
4) Are the rate going up, down, the same?
5) What is the current trend of the Federal Reserve
policy toward interest rates?
Another way to follow interest rates is to go to