Monday, June 02, 2008

A mugger in town? Inflation!

"INFLATION IS AS VIOLENT AS A MUGGER, AS FRIGHTENING AS AN ARMED ROBBER, AND AS DEADLY AS A HIT MAN." Ronald Reagan.

You may not describe the effects of inflation in those strong terms yourself. However the effects of inflation do affect your life, your home, your gas tank and your family wallet. And inflation is also the nemesis of Bonds and therefore home loan rates, because just like inflation erodes the value of the dollars you spend, inflation erodes the value of the fixed return a Bond provides. And last week, Bond pricing worsened on news of inflation, causing home loan rates to move higher by about .25% across the board and reaching the highest levels seen in weeks. According to one of my best loan sources Ed Varon at Pacifica Mortgage.

That will slow buyers down just a little more. And force the prices down a little more. Maybe make it a little more likely that there will be a change of the party in power come election day. Would that be the White House going from Republican to Democrat or in Congress going from Democrat to Republican? I will not make any wild bets on that horse race. LOL

But the loans and the Real Estate Market are not a laughing matter. Higher loan costs are not going to free up more funds for more absorption of the excess properties on the market. Auctions bring in those with a pocket full of cash looking for a steal.

So many properties in my zone have “In Escrow” and “Sold” signs in front of them that I know there are savvy Westside buyers out there scooping up the next renovation project or a quality property for a personal residence knowing that they are getting a deal that is “worth it in the Long Run” Yep. Priced right it still moves on the Westside of LA.

Please call me if you want my insights into what is a good deal on todays market.

Keith Lambert
310-391-0821

No comments: