Rates & the 'Fiscal Cliff'
Two items this week--interest rates and the so-called Fiscal Cliff.
In the former, rates for the past week for 30 year fixed rate mortgages remained at almost historic lows, increasing from the prior week by only an infinitesimal 0.01% to 3.32%. Fifteen year fixed rates also remained near all time lows in the low 2.60's. All are good reasons for either buying or selling your home, the reasons for which those of you who are regular visitors here already are familiar with.
The latter item, the 'Fiscal Cliff'' is a bit more complex. The 'cliff' is what pre-established spending cuts and budget moves will create if an agreement for broader more specific changes in the budget is not reached by midnight on 31 December. The main sticking points appear to be the Republicans digging their heels in over proposed tax increases on the wealthiest in the nation, while the Democrats are fighting to avoid entitlement reductions in Social Security and Medicare, and, possibly, the mortgage interest deduction.
In Meet The Press appearances and press interviews, respectively, Sec. of the Treasury Geithner and House Speaker Boehner have very publicly continued to display their respective dug in positions, and, while an increasing number of Republicans have publicly come out expressing some give on the tax issue, both sides seem determined to stick to their guns, even in the face of a number of CEO's of major firms that have publicly stated that there must be increased taxes on the wealthiest taxpayers.
What does it all mean for us here in Marin? There are a number of economists and financial experts who have stated that it will hit our area as hard as the rest of the country. They feel this way because one of the major spending cuts that is mandated is defense spending, an area that has major beneficiaries in northern California. Given this type of effect (billions in lost spending locally), the experts feel that the resulting ripples will affect all areas of the economy in a negative way.
Conversely, there are a few economic experts who feel that our region should survive with relatively little economic damage. They feel this way because of the diversified local economy, defense, high tech, finance, energy development and food supply, to name an important few areas, coupled with the economic size of our area (Bay Area ranks in the top 20 among nations in GDP), we will be able to avoid most of the hit that the rest of the country could face.
Who's right? Well, hopefully, we won't have to find out. One thing everyone can do is to write/text/phone/email to our Congressional rep (Lynn Wolsey) and Senators (Boxer & Feinstein) and stress the need to get something settled before December 31. Meanwhile, as I come across any info, I'll post here for all of you faithful readers to see and hopefully benefit from it.