After a huge drop in interest rates last week, this week should see some consolidation. The stock market and the bond markets are both technically over-extended. That said, we still don’t expect interest rates will increase much even if there is some reversal this week. The overall trend is bullish on increasing US economic weakness and the never-ending debt problems in Europe. Spain has serious problems in its banking sector and unemployment is increasing; Greece will; hold elections on the 17th to determine whether Greek citizens want to stay in the Union or leave it. A Greek exit of the EU would generate additional fears that Ireland and Portugal might follow.Europe’s deepening economic crisis, leaves the US bond market as a place to park money.
What does that mean for real estate?
- Lower interest rates will attract more buyers to the market;
- More buyers means the continuation of the sellers market, making it more attractive for sellers to sell their homes and push prices;
- We should see even more investors coming to the table to buy, which will again push prices.