The Fed factor

The Federal Reserve's decision to cut interest rates twice last month appears to have created a slight stirring but only slight in the housing markets in northern Nevada.

It's still far too early to track whether home buyers have been spurred to purchase homes and sign mortgage documents as the result of the Fed's decision to reduce its benchmark rate by 0.75 percent on Jan. 22, followed by another half-point cut a week later.

And those rate cuts don't directly affect the price of mortgages, which are set by bond markets that also worry about the potential for inflation if rates are cut too far, too fast.

Even so, real estate agents and mortgage lenders say they've seen a little more activity since the rate cuts.

Wayne Capurro, president of the Reno-Sparks Association of Realtors, notes for instance that an agent at his company, Capurro & Reid Real Estate, delivered five offers from buyers on homes in recent days and all five were accepted.

And Darl Wilson, president of Nevada Home Financing, a Reno company that specializes in financing manufactured housing, says the company has seen a modest uptick in callers inquiring about rates and availability of financing in the past couple of weeks.

But no one is about to say the residential market has turned a corner.

"I don't see anything that says, 'The turnaround has happened,'" Capurro says.

On the other hand, he says the growth of unsold inventory appears to be slowing, and the residential market in northern Nevada will begin to firm as supply and demand get into better balance.

Demand, Capurro says, is beginning to stir from two sources - bottom-fishing investors who think they can get a bargain and families that previously were priced out of the residential market but now see the door reopening from the combination of lower prices and less expensive mortgages.

The Mortgage Bankers Association said last week that rates on 30-year fixed mortgages averaged 5.61 percent last week compared with slightly more than 6 percent at the start of this year.

"Anything that makes housing more affordable is going to help bring about the bottoming of this market that much more quickly," Capurro says.

One lender, Bruce Specter, the owner of Sceptre Mortgage LLC in Reno, says he's been surprised that recent rate cuts haven't generated even more traffic.

"You'd think there would be a lot more interest with rates being at historic lows," he says. "There's a lot of fence-sitting right now."

Some buyers, he says, may be doing the math this way:

Recent forecasts for the residential brokerage business say that sales prices in the Reno-Sparks area still might fall by 5 percent or so before touching bottom this year. So some buyers may figure they'll be dollars ahead if they wait for sales prices to fall, even though they may be risking an upward move in mortgage rates in the meantime.

Lower mortgage rates, he says, also aren't providing much help to homeowners who are up to their eyeballs in mortgage debt and are looking desperately to refinance their loans.

They now find, Specter says, that the value has fallen at the same time that lenders are cutting back the amount that they'll lend.

And the situation is even more difficult in markets such as northern Nevada that some lenders have tagged as declining, Specter says.

In those markets, mortgage companies sometimes are lending even a smaller percentage of a home's value.