Last Wednesday, Ben Bernanke, Chairman of the Federal Reserve, reaffirmed that short-term interest rates would stay historically low for “an extended period.”
The speech caused a stock market rally of 50 points within one hour. Billions of dollars transacted in under sixty minutes, over a few choice words. Wow.
Words influence the world – a five-minute speech with carefully-chosen words can be the difference between buy and sell. We all know this.
But the ultimate question is: how will the “extended period,” comment influence the struggling residential real estate market?
It should build urgency into the equation. (I said “should,” not “will.” After all, this post is about carefully-chosen words.)
Potential buyers have just been granted about six more months to expect low rates. This should matter to them.
Six months takes us to September. If buyers wait for the Fall buying season, they MIGHT miss out on locking in a low rate this Spring – a low rate that was just assured by Bernanke’s speech.
Potential buyers who see it this way should be marking their calendars for house hunting next month.
Factor in the April 30th deadline for certain homebuyer tax credits and you have even MORE urgency.
It’s starting to feel like “fear of loss,” the magic element that fuels real estate sales. The fear that if you don’t ink the deal NOW, another buyer will snap up your dream home before you do.
Fear of loss can also apply to unique interest rates and tax credits that might slip away if you don’t buy soon. At least that’s the message we HOPE buyers are getting right now.
If a five-minute speech with a few choice words can spur billions of dollars worth of transactions, maybe a 300-word blog post with a few choice words can do the same for the real estate industry.
Okay, that’s a bit of an “extended,” fantasy, to say the least. Heck, if this post results in one sale, it’d pay for itself a million times over. I’ll let you know how it goes.
GB