On January 6, the Senate confirmed Janet Yellen to head the Federal Reserve’s Board of Governors, making it the first time ever that a woman has led the nation’s most important financial institution. In some respects, it makes her the most powerful woman in the United States.
As with every personnel change in the Fed, Yellen’s rise
has fostered plenty of concerns about the direction the Federal Reserve will
take under her leadership. Since it’s the institution that determines the
federal funds rate—which in turn dictates how much businesses and individuals
pay for their loans—any change in Federal Reserve policy has a significant
impact on our North Las Vegas home loan rates. Sooner or later, those rates
affect just about all of us.
So, what clues do we have about the direction Ms. Yellen
is likely to lean? One came just before the financial crisis. Before the
financial meltdown, Yellen expressed concerned. In 2005 she is quoted as
saying, “Analyses
do indicate that house prices are abnormally high, that there is a
“bubble" element, even accounting for factors that would support high
house prices."
Last year
was an excellent one for North Las Vegas real estate, yet according to the
Standard & Poor’s Case-Shiller Index, national housing prices are still 20%
off the peaks set in 2006. Research from real estate website Trulia shows that
U.S. housing is still 4% undervalued (compared with a 39% overvaluation reached at the 2006 peak). Happily, Yellen, an early
identifier of the previous housing bubble, has not expressed similar concerns
about today’s real estate market.
In 2012, the Federal Reserve’s previous leadership announced
an unemployment threshold of 6.5% as the point at which it would consider
raising interest rates. During Yellen’s first testimony as Chairman, she stated
that the Federal open market committee would likely keep interest rates near
zero well past that mark. In Yellen’s view, the “recovery in the labor market is far from complete.” As evidence, Yellen pointed to
7.1 million people who are mired in part time work but who would prefer full
time jobs—and to the 3.6 million people who have been unemployed longer than
six months.
For North Las Vegas home loan rate watchers concerned that
a rise in rates might dent real estate values, the new Chairman has sounded
some reassuring notes. In her recent address to the Committee on Financial
Services, Yellen explicitly stated that she expects “a great deal of continuity in the FOMC’s
approach to monetary policy.” That
could mean that interest rates for local home loans might gradually rise, it’s
not likely to be precipitous.
The bottom line: dramatic rises in interest rates are
unlikely under Yellen’s watch, but those considering getting a home loan who
have not yet taken advantage of still low interest rates might do well to
consider doing so.
Andrea Gonzalez, Realtor® "Your Dedicated Realtor for Life"Realty One Group
5550 Painted Mirage Rd, Las Vegas, Nevada 89149Serving: Summerlin, Las Vegas and North Las Vegas
Direct: 702.485.7887Search For A Home: Las Vegas Online Search
It is always an honor to assist Home Buyers and Sellers with their Las Vegas Real Estate needs. If you are searching for Las Vegas Real Estate Listings, then I urge you to utilize the valuable tools on my VERY USER FRIENDLY WEBSITE. Most important, Write, Phone or Text Me with any questions.
