February Market Update

February 2nd, 2004

Just a few days ago, the Federal Reserve released a statement from their most recent meeting that suggested that their policy of keeping key interest rates at record lows may be changing. Previously it was expected that the “Fed” would not raise rates until Fall. Now it appears the first rate increase may come sometime this Summer. While interest rates on home loans are not tied directly to the “Fed Rate,” it is impacted by rising rates, especially ARM products. Rates during January fell to as low as 5.375% on a 30 year fixed before rising to almost 6.0% by the end of the month. The latest round of snow storms and subzero temperatures has cooled off the Open House traffic but buyer activity is still strong. There’s been a bump in new listings on the market in the last week or two, which I expect to increase even further as we head for Spring. February looks to be a good month for buyers and sellers. Interest rates are expected to hover around 6% and housing demand should rise as the month goes forward.

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Edina Realty – Aaron Dickinson