The more things change, the more they stay the same. Have you heard that before? In real estate, even though we think the market is doing something peculiar, grand, or disappointing – its likely have done this before. Just how good is your memory? Or perhaps better said, how old are you.

Some say real estate functions off a seven year cycles. Others say it is the basket of indicators that determine change. Perhaps both. Tightening of lending standards would be an example of both. Historically it takes about seven years for an economy to bounce off its lows (recession), and too often it overshoots (exuberance) its sustainability level, to become hot (excessive).  Interest rates are a tool to control these movements. Or they have been. The Fed is always looking at other breaks and stimulators to compliment the simpler tools in their bag of tricks.

So, what does the future hold for climbing interest rates? A market slow down for sure, but also a redirection as to how we will be selling real estate in such climates. Assumptions, AITD’s and ‘Subject To’s” will replace the new loan ethic when borrowing becomes prohibitive. That just means all these low rate first trust deeds sitting on properties will become saleable commodities. Just takes cash to get down to the existing loan. Once more, cash is king. Don’t ever forget it. (Not like you have. Like me, you just wish you had more of it)  - John Linthurst

The lenders will cry foul that the market has figured a way to play on their own court and not the lenders court. There will be lawsuits. Alienation clause arguments. But why take out a new 14% mortgage when you can service the previous sellers 4% mortgage just fine?

Okay so where and when did we experience this dynamic before. Clearly you will recall in the early eighties this was exactly the methodology of moving families from point A to point B. But then again, there is a chance, you weren’t born yet.