Market Action Report – December 2019, Year End Report

Clients and Friends,

Bella Casa Real Estate Group began in McMinnville in March of 2007, 4 months before the market began to crash. Because of all the turmoil, fear, anxiety, and turmoil I began to send this report monthly to our clients and those who wanted more information. I annotated the reports and added my thoughts from inside the industry. It was well-received and appreciated by many. By 2018 we were well-established on solid ground and people were not only content, but elated! I took a break from this endeavor and tried to clean-out my garage, a 13 year project which is still in progress!

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The marketplace today is solid and there are no signs to fear on the horizon right now. Remember also, the previous dark market was way back in the very early 1980’s until 1987 (although there certainly have been smaller setbacks through the decades). However, I think the time is ripe to begin helping our clients monitor the local real estate markets monthly. To summarize where we have been, let me bullet point an overview below. Remember, the reports I am sending are from the Regional Multiple Listing Service (RMLS) and focus on the Portland metro marketplace which includes Yamhill County (Wine Country) the epicenter of our business.
• 2005 the highpoint of the pre-fall market (the fun years)
• 2007 the shot heard round the world as a national mortgage company went belly-up over one weekend (paralysis began)
• 2008 in September the financial industry melted down (the ‘dark years’ begin)
• 2012 the Portland area markets begin to show real recovery; not so much in Yamhill County
• 2013-14 Yamhill County shows the first signs of new life
• 2015 Yamhill County’s first year back to normal!
• 2015-2017 the very good years!
• 2018-19 the markets level off, the recovery is complete; the marketplace is back to ‘normal reliability’.

We currently have a marketplace that is balanced between buyers and sellers. We have solid fundaments. It is a good, reliable marketplace and seemingly a safe marketplace. Money is plentiful for loans; interest rates are low. New construction is hot seemingly everywhere to meet rapidly escalating demand because of so many people moving into Oregon right now (have you noticed the traffic?). During the dark years, many people lost their credit, their homes, and their ability to get a loan (remember the years of short-sales and foreclosures, and desperate sales?). Since then everyone who wanted to sell or buy, but couldn’t, has now done that. Even the people whose credit was destroyed are now back in the market with a new lease on life (and the ability to get loans again). This is why the marketplace has leveled off – everyone who needed to buy, or wanted to buy, or had to wait to buy has now bought and therefore the market is functioning normally at a reliable pace.

We will have another crash (I am sorry!) but we all hope it will be at least another 15 years from now! In the meantime we will see the marketplace ebb and flow. I want to be able to help our clients measure the marketplace monthly so there are no surprises and they understand the conditions so they can make the best decisions.

Attached is the monthly Market Action Report for year end 2019, plus an overview chart of past years back to 1992. This focuses on Yamhill County but it also has information for the entire metroplex. You can reply to be removed from our email list and at any time; we can add those who could profit by this. We wish you the very best in 2020…

I have also attached the end of year 2019 Sales by Office for Yamhill County. There were 337 offices that sold into Yamhill County; Bella Casa Real Estate Group is #2 in sales behind a new construction brokerage.


Best regards,



Published 01.24.2020

Climbing Home Prices – Market Action Report

Clients and Friends,

Prices continue to climb even while we wrestle to understand the changing market conditions. Overall, in the Portland Metro Area (including Yamhill County), average and median prices are high and climbing- each at 10.7% comparing the last 12 months with the 12 months previous to that period. Prices have been rising since 2012 in Portland and its close surrounding communities. In Oregon’s Wine Country they have been rising significantly since 2015.

Market Action Report- May 2017

Market Action Home Sales Report- May 2017

2016 was a year of leveling-out for sales volume and sales statistics everywhere. 2017 has been strange, to say the least. We have discussed the dire impact of the long and wet (and cold) winter. With May’s report we see dramatic improvement in all categories compared to last month! By utilizing techniques similar to Sampling in research, it has been observed that the statistics match our anecdotal experiences and support our conclusion that May really marks the beginning of the real estate year for 2017! Because of this, the ‘Year-to-date’ statistics are dismal and our performance compared to May in 2016 has been bad to mixed until this month.

We have no reason to expect anything but a strong and healthy marketplace for the rest of the year. With a late blooming season, perhaps we can hope for a longer prime selling season- perhaps right up to Autumn instead of petering-out by the end of July??? Recently the interest rates even dropped to the second-lowest rates in the past 10 years. This more than any other issue affects buyers’ buying power. Can we really sustain the recovery intensity and prices rising into the stratosphere? Long ago I proposed that Portland is following the trend I have witnessed growing up in Southern California and watching the prices escalate in Los Angeles and San Diego. San Francisco and the Silicon Valley are legendary in their price appreciation. Seattle already had its quantum leap; it is natural to see the Portland metroplex following suit. Yes, I think prices can keep going up’ it has happened before in our own west coast neighborhood. Portland is not only the most affordable metro area on the left coast but it is in high demand by people moving out of other states.

Our core area of expertise is the greater Yamhill County area. Sales have slowed dramatically except for the lower price ranges in our towns. All our numbers are lower than last year except for price appreciation. It is challenging to buy for under $300k in Newberg. Currently there are only 13 active sales under that price point and most of them are condos, attached homes, townhouses, mfg homes and detached homes but on tiny lots. In McMinnville you can do better; there are 11 homes available and all of them detached. Only 2 are under $200k; 4 are under $275k and the rest are between $275k and $300k! We are way above the top of the market in 2007 in these areas and price ranges.

My biggest concern is for our rural properties. This has been the last segment to recover. These sales are dramatically down with very few sales in massive areas of Yamhill and Polk Counties. It is clearly still a buyer’s market in wine country (except for vineyard land). Recently, I have done a number of reviews of large acreage properties and after a brief flurry of sales (pent-up demand from a dead winter), we have almost no buyers in the marketplace right now. Closed and pending sales over 10 acres are in the doldrums.

We are in the best time of the year to sell your property. Buyers have the most choice now- there are good reasons to make the move sooner rather than later. If any of our excellent brokers can assist you; we would love to hear from you or your family and friends. Call us direct; text us, or email us and we will help you understand the marketplace even better and how your purchase or sale can be maximized for your benefit and goals.

We are winding down the second quarter already… enjoy the late blooming summer!

Best regards,

Randy McCreith, Principal Broker, 503-310-9147
Bella Casa Real Estate Group

April & May Market Action Report: Marketplace Coming to Life

Clients and Friends,

It happens at least one month every year… the workload becomes so intense that it takes me two months to find time to put out the Market Action Report. That is not necessarily bad news! It is a good problem to have (compared to the famine years) but it is still a problem…

I am providing two months’ Market Action Report- MARCH AND APRIL. As you know well by now, the 4thquarter and the 1st quarter were very slow for sales; our sellers know it all too well. In a rapidly ascending marketplace in our area, it is frustrating and incomprehensible to have properties sit on the market with little or no action. We blame the weather (perhaps a bit the election as well). In any case, buyers had no stomach to shop homes or rural lands, in relentless rain, snow, cloudy darkness, swampy land, and very cold temperatures. I think we got two sunny days in a row in mid-March for the first time. We are still waiting for one full week of sun since September!

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The marketplace came to life in late March and through April and May has been busy. Overall, in 2016, we saw a leveling-off of the marketplace particularly in Portland. Their surge of pent-up demand is waning and continuing to mellow. Our local market conditions continue growing; we have a ways to go yet. Like the crest of a wave which began in Portland and has reached us 3 years later, we are cresting now while the huge wave has passed them by. Note that though the wave passes, the tide keeps rising- that is, prices have not moderated anywhere yet!

March numbers are down from March 2016, in fact, our first quarter numbers are closer to the numbers put up in 2015 rather than in 2016, which was the first ‘good year’ of the recovery for our area.

What may be surprising to you as you peruse the graphs and statistics is that the numbers in April also look disappointing??? Keep in mind, that if buyers came out in force in late March (instead of early January) the effect seen in the statistics will likely not be known until May at the earliest, but more-so by June. Transactions still take about 60 days to close after the buyers find the right property for them. For now, you will have to take our word that the marketplace is bustling already and the good numbers are on their way. We have no reason to expect anything but a very good year for sellers.

For buyers, it will continue to be a competitive (and frustrating) market where the longer you wait, the more you will likely pay. Yes, it remains a very strong ‘sellers market’. Buyers should also note the Affordability Index in the April Report.

Our brokerage is growing as we attract new agents (fresh talent) and seasoned brokers looking for a better work culture and fairer system which is professional. We are eager to work for you, and those you know who need premium real estate services for less money. We gain many clients because of our marketing and our community presence, but our greater hope is that our clients who can testify of our work and values will refer us to friends and family; to coworkers and neighbors, and whenever they hear of a need we can help with. Thank you for your consideration.

Best regards,




Market Action Report for Feb 2017 – Portland Metroplex including Yamhill County

Clients and Friends,

I have now been annotating these reports and sending them out with additional custom information for 10 years! In 2007 we charted the escalation of the marketplace and we all wondered how young people were ever going to afford their first home! For the next 7 years we bemoaned a crashing and burning marketplace and experienced the vast human carnage directly or vicariously. The Dark Years will live in infamy the rest of my life. Portland led the nation with the most aggressive recovery for about 4 years (led by the slogan: “Keep Portland Weird”) and we in Oregon’s Wine Region have finally experienced 2 very good years of recovery (and still have a ways to go).

Market Action Report – February 2017

Market Action Home Sales Reports – February 2017 Yamhill County

2016 was a leveling-out year in the recovery (Portland fell to about 5th in the nation for the recovery). The Fall and Winter of 2016 and 2017 has been a very soft spot in the market stats. So soon we forget! I think it rained everyday during the month of October (normally a nice month). I still do not remember two days in a row of good weather since then. Incessant rain, an amazing number of freezing temperatures, and countless snow events have taken their toll on our real estate marketplace through the entire first quarter.

This month’s numbers are not good except that the prices keep rising. When the sun comes out to play, rather than peek out, I trust we will see a surge to make-up for the holed-up days gone by. Hang in there!

This year I chose to share with you some of our internal training of sales professionals. I hope for some people in sales this is helpful but I am doing so because I know of no better way to communicate our values than for you to see what we believe and what we are committed to living out personally and corporately. I hope this peek into our business behind the curtain is interesting. This month we look at “The most difficult job on the planet.” I certainly could be offensive with this but if you read it with an open mind; I think we will agree that people are the greatest challenge but also among the greatest rewards.

It is the listing season and getting your property on the market now comes with great advantages for sellers.

It is certainly not too late but keep in mind that by the end of July, the marketplace down-shifts and is not as advantageous for sellers. Buyers need additional help to achieve the homes and properties they want in a very competitive marketplace. Please consider us as you refer professionals to your family, friends, co-workers, or neighbors. We share with you our values, our production numbers, and our methods to give you the confidence that we will do good for you. We will go the extra mile always for your referrals and express our gratitude for your confidence in us. We believe our tag line and it is for you: Buy. Sell. Be Happy.

Here is hoping for a wonderful Spring (soon!).

Best regards,

Randy McCreith

Year-end review – Market Action Report

Friends and Colleagues:

The Market Action Reports of December 2014 cap a second successful year of real estate recovery (for Portland, a 3rd year). There is something good in these pages for everyone to celebrate. The market conditions in the best of these areas reflect the volume and pricing of the top of the market in 2007- not necessarily the peaks in volume (2005), nor the high water marks of average and median pricing (see the charts), but definitely the success of the top-of-the-market numbers. It remains true, however, that the farther out from downtown Portland one is, the slower and the weaker is the recovery. Rural properties lag more than any other category. In our area we have many rural acreage properties and still some struggling rural towns which are still waiting. Their prices remain low, their sales volume remains light, and their demand remains weak. To end this paragraph on a positive note, at least every aspect of real estate is moving in the right direction.

December 2014 compared with December of 2013, the following improvements are now in the book:

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  • Closed sales: +25.6%
  • Pending sales: +12.3%
  • New listings: +15.5%
  • Time on the market: from 87 days to 76 days
  • Inventory: from 3.2 months to 2.3 months
  • Average sale price: from $310k to $333k
  • Median sale price: from $265k to $285k

Year over year, 2014 over 2013:

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  • Closed sales: +3.6%
  • Pending sales: +4.3%
  • New listings: +5.0%
  • Time on the market: 76 days
  • Inventory: drops to a lowest point: 2.3 months
  • Average sale price: +7.2% now at levels at the top of the market
  • Median sale price: +7.7% now at levels at the top of the market

– Distressed listings and sales are up in numbers but with a less significant effect on the marketplace (4 pages).


Home Sales Reports for both Yamhill County and Washington County (4 pages).


Interest rates are down well under 4% (as low as 3.5% for a 30 year fixed loan) and we are off to a good start to the year. We are expecting a better year for sales this year than we have seen since the top of the market in 2006 and 2007. We still have challenges and disappointments but overall, things are getting better across the board. We are glad to help you understand how the market impacts your property. It is the peak season to list properties (for the next 6months) so please call us if you are considering a sale or know someone who might be. We continue to expand our services and improve our methods to be the best in the business for our area.

Best regards,


Randy McCreith, Principal Broker
Cell: 503-310-9147 Fax: 866-281-6653
Bella Casa Real Estate Group

Local New Construction Buzz

Have you noticed the boom of new construction in Yamhill County? In McMinnville’s West Valley there is an entire subdivision underway, and many formerly empty lots throughout the county have new homes for sale. Kansas City also has properties available and up for sale from BROOKFIELD RESIDENTIAL for people to check out if they are in that area.

This Oregonian article suggests Portland is not keeping up with demand for new homes: Perhaps this lack of supply will encourage even more Portland buyers to consider expanding their home search to Newberg, McMinnville, Yamhill, Carlton, Dundee in search of commute-friendly and affordable family homes.

Here are the 20 most affordable new construction homes for sale right now in McMinnville:

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National Housing News provided by Guild Mortgage:

Housing Starts sizzled in December, rising 4.4 percent from November to 1.089 million annualized units, coming in above expectations. The rise in Housing Starts was the strongest annual pace in seven years and it was led by a jump in starts for single-family homes, which reached their highest level since early 2008.Building Permits, a sign of future construction, did decrease by nearly 2 percent in December but still came in at a strong 1.03 million. Both Building Permits and Housing Starts figures were also revised higher in November.Also of note, the January National Association of Home Builders Housing Market Index was 57. Readings above 50 are considered positive sentiments about market conditions. Meanwhile, December Existing Home Sales rose from November. However, sales in 2014 were lower compared to 2013 due to a sluggish start in the beginning of the year. Overall, the housing sector continues to improve. If you’re looking for help with your new housing construction project, check out this link for some top tips – In news overseas, the European Central Bank has announced that it will enact a massive Quantitative Easing, or QE, style of Bond purchases to fight off deflation and promote economic growth in the region. The news has caused extreme volatility in U.S. markets. However, Mortgage Bonds and home loan rates (which are tied to Mortgage Bonds) remain near historic best levels.

The bottom line is that now is a great time to consider a home purchase or refinance. Let me know if I can answer any questions at all for you or your clients.

Selling Real Estate in 2014

Welcome to 2014; we wish you and yours a prosperous New Year! Many people are wondering what to expect in local real estate during 2014. For our local markets in the greater Yamhill County area, these are my expectations, some concerns, and even some wishes. Let’s start with a simple overview of last year.

Summary of 2013

  • The second year of a good housing recovery following 5 years of famine.
  • A very good first half of the year and then a softer, less impressive, second half of the year.
  • The markets suffered a blow mid-year when interest rates went up a full percentage point on speculation that the Federal Reserve would start ‘tapering’ its bond-buying program which does impact interest rates.
  • Cities and towns in our area did very well regarding the volume of sales, price stability, and even some appreciation of value. The farther away from Portland the slower and weaker the recovery. For example, Newberg did better than McMinnville but not as good as Sherwood.
  • Particularly disappointing to us and our clients:
  1. Rural residential acreage properties began to sell but the volume of sales was low, the prices were remained low and even declined as a result of competition and brutal negotiations.
  2. Buildable lots and land: lots in town began a recovery. Sub-divisions sold for low prices and builders began to build again in earnest. New construction was once again an option for buyers (with many using to help them manage their finances to fund these endeavors). Rural buildable parcels have not done well yet; almost no improvement.
  3. Luxury properties still have a long way to recover in our area. In states like Kansas, properties in prestige resort-like areas, as sold by Cedar Creek Realty, are proving to be hits amongst those looking to move into the area.

No complaints from me about 2013 after experiencing the years before that, but there is plenty of room for improvement this new year. I think we should see good progress and most pundits seem to be optimistic (like they were in 2007! Just a reminder about the pitfalls of prognostication…).

2014 Expectations and a Wish list

  • We need our out-of-state buyers back! They are the ones who buy our luxury properties and our rural residential properties. We expected them last year but only saw a few. When they return, our rural properties will enjoy a robust recovery again. I am expecting significant improvement in rural sales this year.
  • Buildable parcels and lots in the towns and cities. New construction is hot in Portland already and we are following Portland by about a year and a half. City lots have been selling to builders and some buyers who want custom homes. Once again there are ‘spec’ homes available. I expect much better results for these kinds of properties this year. I think we will see the most dramatic recovery this year in new construction.
  • I think the recovery will finally permeate all communities in our area this year including the West Valley. We have a development of new homes being built in Willamina and that will allow us to measure the progress in markets farthest from Portland.
  • Distressed sales are disappearing rapidly. Is there a shadow inventory which will hit the market and do some damage? I think the percentage that do come to market will feed the need for investment dollars and ‘flippers’, but short sales and bank-owned properties will have a less influential role in property values.
  • The economy is doing better but there is still a great deal of uncertainty. The general stock market is a good example: investments in stocks have done well for years now and overall the market went up 38% in 2013! Behind the numbers, consider the dynamics. The housing crash began in our area in mid-2007 and was followed in September of 2008 with the financial meltdown and a national economic paralysis for the rest of the year. Immediately and by the beginning of 2009, businesses laid-off many people, closed down and consolidated facilities, cut out all extraneous costs, and aggressively went into economic survival mode. The result was that the business community became very profitable in spite of a near depression. That is what free enterprise does; these owners and entrepreneurs will find a way to thrive whatever the market conditions. Their careers depend on it and for many their lives depend on it. The result was one of the highest run-ups in stock market value in recent history in 2009 because the value of stocks is based on profitability.

However, much to the consternation of many, businesses did not add employees, or expand, or take risks; they became wealthy but have hoarded that wealth. WHY??? Because they are evil? No one wants to throw good money after bad. Business is not going to risk what they have achieved when so little in the economy is stable, predictable/dependable, and therefore a ‘good’ investment. In spite of government numbers designed to make things seem better for political purposes; business people know better. They know the unemployment numbers may actually mean that there are a lot of people no longer getting unemployment benefits. The actual workforce participation remains at an historic low and that is the telling symptom. When it is truly safe to go back into the water, business will contribute to a strengthening economy by hiring and expanding. I hope that will be this year. The housing industry pulled us down into this with the sub-prime mortgage mess; I would like to see a robust housing market help pull us out. However, at some point, the housing recovery needs genuine help from the general economy. It cannot do it all alone. Let’s hope for better!

  • Interest rates: The Federal Reserve has begun the tapering of its bond-buying program. Instead of purchasing $85 billion of bonds per month, the next purchase will be $75 billion. The implementation of this (announced just a couple of weeks ago) was met with acceptance, not fear, and as a harbinger of better economic times ahead. However, remember that mortgage rates are tied to the bond markets (long-term debt) and as the economy improves, and bonds do not sell as well as they were, the interest rate rises to attract more buyers to them. Everyone I have read and heard expects the mortgage interest rate to rise at least 1% in 2014. Last year, that kind of a increase damaged the housing market nationally and uniformly. 1% interest rate increase represents about a 10% decline in purchasing power for buyers.

That is a positive, optimistic view of the year that we are entering. It comes with some qualifiers and cautions but it is what I am counting on for success in managing my business this year.


  1. I think the safest time to sell may be early in the year as it was last year. List sooner rather than later. Buy sooner rather than waiting (if you have a choice).
  2. While Portland is a seller’s market, Yamhill County is technically still a slight buyer’s market. Pricing is still the key to getting your property sold. We are not experiencing an abundance of competing offers and escalating prices as they are seeing in some of the areas in Portland.
  3. Property condition is the next most powerful dynamic in getting your sale in a competitive market. Do all you can to repair, update, freshen, and organize and clean your home to get it sold.
  4. Do you own a real estate portfolio featuring multiple properties? If so, you might want to consider reaching out to a team of property managers who can ensure all your properties are handled appropriately. Moreover, it is no secret that managing multiple properties at once can be a tough challenge. Not sure where to begin? There are plenty of property managers in jacksonville fl that would be more than happy to assist you with your real estate endeavours so do not be afraid to do some research online to find a property management company in your area.
  5. Stay tuned and we will keep you updated every month on evolving market conditions so you can make wise decisions in your own best interest.

I hope this helps with your planning. I have a team of dependable and knowledgeable professionals who are glad to be working for you. We sold 50 of our listings last year along with helping a lot of buyers find their next home. It is a team like this, and clients like you that give me a lot of hope that 2014 will be even a much better year for all of us!

Best regards,

Randy McCreith, Principal Broker
Bella Casa Real Estate Group
Cell: 503-310-9147

January 2013 Market Action Report

Clients and Friends,

2013 began with promising news for the local housing market this year. We now regularly see statistics that are better than any year back to 2007 when the market was white hot. The January 2013 Home Sales Report reveals that closed sales and pending sales outperformed any of the past 6 years. While The Market Action Report for January shows inventory increased from 3.6 to 4.7 months since December, this is the predictable influx of new listings in January of any year. 4.7 months worth of inventory is in the normal range. Notice that time on the market continues to drop, 16.3% less than a year ago.

Included in this email is an article, Buyer Advisory- Part Two. Last month we addressed interest rates, which have continued to slowly rise (now about 3.5% for a 30 year fixed rate loan); this month the topic is escalating prices. Price increases are measured by the Average Sales Price (actual solds) or the Median Sales Price (the mid-point of highest price and lowest price) See The Market Action Report. For example, the average sales price in Yamhill County rose 10.6% since January of 2012! Are prices really up by over 10% since last year? They are not! As housing improves, all price ranges (even the non-productive ones) make a come-back. Until the market is firing on all cylinders, higher priced sales will inordinately affect the average sale price. I can still show you some types of properties and price ranges that are still showing declining prices. When we know a ‘normal’ market, the average sale price will be more meaningful. This article is an important message about stabilizing pricing, improvements in all sectors of the market, and it puts us on notice of imminent price appreciation.

This issue contains the Affordability Index, a quarterly report surveying conditions over the past decade, located on the last page of the Market Action Report. We still have the 5th highest rating favoring buyers, but things are changing as both interest rates and prices begin to rise and inventory drops. Changing conditions are why we are focusing on a Buyers Advisory. Buyers need to be aware of prospective lost opportunity while sellers are relieved that their property will likely sell this year and without as much financial damage.

Only competent people on the ground in local markets can help you understand how all of this affects your particular property and the timing for your sale. Our Realtors®, most of them Principal Brokers, and all of them local experts, can help you price your property to sell without leaving money on the table. We can also help buyers find the best values and negotiate wisely so as not to miss great opportunities. Thank you for your trust in us and your referrals to your friends, family, neighbors, and coworkers.

Best regards,


2013 First Time Home Buyers: Why Mortgage Interest Rates Matter

Those who fail to adapt to changing market conditions always get burned. Buyers got burned in the market escalation before 2007 (a ‘seller’s market’). Sellers often got burned for not adjusting quickly enough during the five-year housing crash since 2007 (a buyer’s market’). The market is changing again and buyers are at risk.

Mortgage interest rates are the most powerful influence affecting affordability for home buyers and specifically first time home buyers. They determine whether people can purchase city homes from CAYENAATX.COM or whether they can afford a smaller apartment on the outskirts of a town. Mortgages can have a rather large input in people’s futures, so it’s important to understand how they work and what they are. If you’re struggling to get to grips with mortgage applications and interest rates, it might be helpful visiting a website like Applying for a mortgage is a complicated process so it’s vital that you do it correctly. The fact that interest rates have dropped to a recent mind-blowing 3-3.5% for a 30 year fixed loan is testimony to how bad the housing crash is/was. Since 2012 the housing markets are improving and this means interest rates will go up, especially as the overall economy improves.

How Mortgage Interest Rates Work

  • Mortgage interest is long-term debt (e.g. 30 years) and therefore is tied to the bond market, also long-term debt. The Federal Reserve, which we hear about frequently in the news, regulates short term rates such as overnight money or the Prime rate.
  • When the economy is bad and worsening, money flees to more stable, fixed, and long term investments. The bond market takes the long view on the economy and produces predictable results regardless of cycles and crises. However, bond yield rates (interest on the investment) drop in difficult times because of increased demand. Five years of bad economic news continued to deflate rates to a low level unprecedented in half a century, but in retrospect, that is not a surprise. Good economic news, particularly improving market conditions, causes money to flow from bonds to the stock market, which reacts with quicker reward and also keeps capital more liquid. Recently, the stock market just surpassed the 14,000 level, not seen since before the housing crash – which is why so many are curious about it these days. Indeed, some who have housing investments may be eyeing up a robinhood app review to see if they should play other markets. Money is moving from bonds to stocks to cash in. The bond market now has to attract more investors with higher yield rates; interest rates therefore rise.
  • Because bonds are a fixed investment for a long period of time, the enemy of bonds is inflation. If I have a 30-year bond (e.g. a mortgage) and inflation causes me to lose 3% per year in real buying power, then that loss comes at the expense of my yield rate (effectively 3% less each year). I am captive to this failing trend unless I can get rid of my bonds, perhaps selling at a loss. Inflation is caused by high government debt and increasing money supply as the government creates/prints more money to pay its bills. It is worth less than it was because there is more of it. Does this sound familiar? Is inflation a necessary consequence of our spending? If so, then interest rates will also rise.

Evaluating Our Current Conditions

  • Currently, there is little inflation and still too little good economic news. Interest rates have stayed very low. However, inflation is a very real risk. Although the inflation rate officially is low, how many of us already feel the increase in the cost of fuel and food and many other staples of life right now? Prices rise in part to keep up with real value because of inflation and in part because of increased demand and therefore improving market conditions.
  • The housing industry is in recovery in most markets nationally right now. Businesses have become lean, efficient, and profitable because of the last 5 years. The stock market is reaching new highs. Unemployment numbers appear to be in decline. Consumer confidence is getting stronger. Will those changes portend a rise in interest rates?
  • The federal government has been stimulating the economy and propping it up since the financial meltdown in the fall of 2008. The Federal Reserve continues to buy mortgage bonds at a pace of about $85 billion per month in order to keep mortgage interest rates low. How long can that continue? The Fed also employs various methods to stimulate economic growth. How much longer will that be seen as necessary? Either these props will no longer be needed and so interest rates will rise on the good news, or when these government purchases stop, the artificially low-interest rates will be left in the dust.

Predicting the Future and Reading the Tea Leaves

Predicting the future is something we are addicted to but most often proves futile. However, we can know two things reliably:

  1. We know what we have now, which is a mortgage interest rate for a 30 year fixed loan which is lower than anything known in over 100 years.
  2. We know what will cause these rates to rise. Economic vitality, inflation, and the removal of government props and stimulus will cause interest rates to rise.

Fluctuation in mortgage rates, which can change several times a day, will likely be with us for a while as our economic news fluctuates widely. Expect rates to rise and fall for a while. How high will rates go? In the early 1980’s, because of a serious inflation problem, interest rates commonly exceeded 20% and mortgage interest peaked at over 16%. 10 years ago, before the market run-up, the 30 year fixed mortgage rates were about 8%, double what it is today. 10 years before that (1990) they hovered at 9%.

For 5 years, I have listened to radio commercials from a particular national mortgage broker warning that ‘these historic rates cannot last!’ Well, they did, and they continued to go down. So much for future prescience! No one really knows what the future holds and it might be possible that one day you may need to use the money tied up in your property to get you through a financial situation or snag in your life. If so then the use of an online equity release calculator may be on the cards to figure out the next step forward.

But like the broken clock (analogue not digital), right at least twice a day, these people will be right at some point. Buyer opportunities today are exceptional but there are good reasons to be concerned that this will change soon. There is logic to what causes rates to rise. If you know the reasons, you can watch, evaluate, and make your own informed decision about when buying is good for you and your goals.

Randy McCreith, Principal Broker
Bella Casa Real Estate Group
Cell: 503-310-9147 Fax: 866-281-6653