Arizona Real Estate Notebook

From Bloomberg;

The potential for higher mortgage rates and mounting foreclosures suggests the overall recovery is “still very fragile,” he said.

“If you raise mortgage rates by three-quarters of one percent,” the amount by which Ranieri said the Fed’s buying, set to end Dec. 31, has reduced them, “it’s going to have some dampening effect,” he said.

“While we’re through most of the subprime issue, we’re just in the middle of, or through a little bit less than half of, Alt-A, and the economy is now starting to take a toll on prime, which is the biggest portion, and the jumbo-prime area is a disaster,” Ranieri said.

Anyone know anything about the expiration of the Fed’s buying program? An interest rate increase of three-quarters of a point would be significant increase from our current extremely low interest rates.

My take on the $8,000 first time home buyer tax credit is that Congress will extend it. The program is popular and Congress isn’t. They can add.

The problem with the $8,000 program is when it ends, we’ll see a withdrawal effect. The program cannibalizes future sales to first time home buyers, so those sales could really drag for a while after the program ends.