Real Estate Update

Summary: Inventory is down, Rates are going up, and Prices are inching up

Mortgage Rates
At the past couple federal reserve meetings, the chairman has announced that with unemployment improving, he will soon phase out "quantitative easing" or the bond purchasing programs. This has driven down the price of 10 year notes (if you pay a lower price, that means your yield goes up on a specific face value bond). 30 year mortgage rates follow 10 year bond rates so mortgage rates have also increased. Mortgage rates have risen from 3.5% to 4.25% over the past 30 days.

Inventory
With the number of homeowners who have lost their homes to foreclosure, there is an ever-increasing number of people renting. This has led to a very low 2.8% vacancy rate (Marquette Advisors, May 2013). Low vacancy rates has led to increases in rent amounts, driving home buyers and in particular, 1st time home buyers into the market place and driving inventories of homes for sale to 10 year lows.

Prices
Supply and demand is also driving up the prices of homes with the median price of a home in the Twin Cities up 14.9% from this time in 2012.