Mortgage rates survived the summer of 2014 still low and stable! Real estate investors want to know: How long will that last? Forecasters are predicting a rise in rates – as they have been doing for over a year. Almost none of the forecasters are willing to commit to a timeframe, but most see the rise as inevitable, and probably sooner rather than later.

What are some of the seemingly contradictory factors that have interest rates jogging in place?

• Upward forces: Both the improving economy and the Fed indicate a rate increase is coming.
• Downward pressure: Unstable world events keep consumers worried about the future.

• Upward forces: Both disposable income and consumer confidence are ticking up.
• Downward pressure: Hiring and salaries are not up as much as economic stats seem to justify.

• Upward forces: Kiplinger sees an economy presently doing better than the forecast, with expectations of increasing good news for the near future.
• Danger point: The longer the delay in the mortgage interest rate increase, the more the danger of an abrupt bump, as is common in any market that is slow to move with the economy.

What have these changing stats meant for real estate investors?

Investors are finding they need to search ever more diligently to find underpriced properties. Distressed home sales – foreclosures and short sales – are down by nearly half from this time last year. Multiple economic information sources see a pullback by investors as the explanation of a slight downward move in home sales in August, in spite of the overall favorable sales trends.

Statistics aside, the forces that create an investor market are eternal – homeowners with more debt than they can pay; property condition deteriorating from age and weather; changing neighborhood demographics; and so on. Perhaps some investors will drop out if the business requires more work, but that leaves the best still in the market.

If you are an experienced investor (or in communication with one) who has had a steady game plan for years, now is the time to evaluate your strategies against changing fundamentals. What is changing about your local market? How is the character of community neighborhoods evolving? Where are the future opportunities for rehabs and which areas have rebounded from the foreclosure crisis?

Fundamental change continues to surround us – technology; energy sources; politics; economics; and much more. The real estate market, both local and national, evolves in response to all these forces. In most areas the past is no indicator of the future! Keep an open mind to the changing market around you, and be prepared to profit from new and better strategies!

What economic statistic do you watch as an indicator of an increase in mortgage interest rates?

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