But it might take a while for these scenarios to play out. Federal Reserve commissioners have been split on their comments regarding when to begin cutting all of their economic stimulus. Many are speculating that policies could start to “taper” in September, but that would likely be a mild beginning to a long and gradual process – one real estate professionals hope won’t shock the system or set back the housing recovery.
“I don’t believe that rates are going to increase very much, and not for a long time,” says Phillips. “When you look at the Fed, they have a dual mandate – employment and inflation. Inflation is persistently below the (dangerous) range and unemployment is still above the target. And GDP growth is still about half the long-term trend potential. Why would the Fed do anything that would significantly increase rates at the moment?
Andrew King is an award-winning journalist with 15 years of experience with the Gannett newspaper company, appearing in The Journal News (Westchester, N.Y.), Asbury Park Press and USA Today. He also contributes to The Real Deal, TheLadders.com and TechPageOne.com.
