The Kings of Real Estate

Ben Bernanke’s low interest rates haven’t made life any easier for first-time home buyers. It’s almost impossible for this group to get a mortgage, never mind trying to compete with the well healed private equity guys. Cash is king in bidding wars and Wall Street has plenty of cash thanks to Bernanke & Co.’s free money truck.

The impact of rising rates has hurt first-time buyers the most, many economists and analysts say, because they are more sensitive to increases in monthly mortgage payments than are more established buyers looking to purchase their second- or third-generation home. The rate for a 30-year, fixed-rate mortgage stands at 4.58%, up from 3.59% two months ago.

The sour news pushed housing stocks lower yet again, a pattern on display since Fed Chairman Ben Bernanke in May acknowledged a change in policy could happen later this year. The iShares US Home Construction ETF fell 2.5% on Friday and is down 19% since May. Homebuilders KB Home, DR Horton and PulteGroup are down more than 30% apiece since May, while Lennar Corp. is off 25%.

E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.

E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.