There is an old financial axiom known to many investors, and that is “Don't Fight the Fed.” This means when the Federal Reserve sets out on a course of action it's often remunerative to tag along.

The Fed has openly and unabashedly set out on a course to get residential real estate prices moving higher. To that end, the Fed has stated it will continue to purchase mortgage-backed securities (MBS) at a rate of $40 billion a month. These purchases ensure a market for low-rate securities, and thus ensures mortgage lending rates will remain low. In fact, analysts at Deutsche Bank estimate these purchases will hold lending rates about 50 basis points lower than they would otherwise be.

Concurrently, the Fed is purchasing these MBS with new money. This means consumer prices, including home prices, will be pressured to rise (more money will be chasing the same amount of goods and services). Therefore, we are very bullish on home prices rising over the next five years just based on price inflation alone (though we also expect fundamentals to continue to improve).

We can't think of a better time to buy a home, and to buy with mortgage financing. Low-cost leverage, which a mortgage provides, means the return on investment will be much higher on invested funds than with a full cash purchase.

What's more, buyers will also have the benefit of amortizing their loans with depreciated dollars.In short, there is no reason for anyone interested in residential real estate not to take the plunge today.

Courtesy of Jessica Regan.

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When you are buying or selling property in today's Harrisburg PA real estate market, it's important to have confidence in your real estate professional. Don’s commitment as your Harrisburg PA REALTOR® is to provide you with the specialized real estate service you deserve.

When you are an informed buyer or seller, you'll make the best decisions for the most important purchase or sale in your lifetime. That's why Don’s goal is to keep you informed on trends in Harrisburg PA real estate. With property values continuing to rise, real estate is a sound investment for now and for the future.

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