Scott Ractliffe is a senior vice president with Pinnacle Financial Partners, where he serves in the mortgage advisor capacity and routinely distributes information to those in the real estate field.

Recently his information was gleaned from MND NewsWire and included data assembled from Mark Palim, Fannie Mae’s vice president of applied economic and housing research.

Palim’s research provides the answer to an oft-pondered scenario for property owners and those involved in the real estate business.

While it is difficult to get real estate professionals to agree on anything, there is one thing that draws consensus: Interest rates will be increasing.

At that point, consensus leaves the room and the debate is on as to how long the rates will remain low and what will happen when they are increased.

Ractliffe is quick to remind his group that “despite earlier predictions for rising rates, the past few months have been very kind to us.” He additionally notes: “Due to a number of factors, both domestically and internationally, we‘ve had the pleasant surprise of seeing 30-year fixed rates staying at the low end of a range between 4.25 percent and 4.75 percent.”

That being said, what happens when the rates climb? Palim says there is no historical precedent for knowing the impact of an interest rate change. Oddly, he then cites data from two periods, a 14-month period from October 1993 to December 1994 when rates increased 237 basis points (from 6.83 percent to 9.20 percent) and another period from October 1998 to May 2000 when rates increased 180 basis points (from 6.71 percent to 8.51 percent).

Based on that data, Palim concludes that rates did not cause prices to decrease.

Ractliffe’s take on Palim’s research is that Palim has suggested rates will not climb higher than 5 percent.

“The interesting thing about Palim’s recent research is that when rates have jumped higher, the number of homes decreased slightly, but prices held steady,” he says.

Personally, I am going to go with Bob Dylan’s “The Times They are A-Changin” theme.

In both of the time periods Palim used in his study, the lower rates had been in place for a short period and then rose to levels that were still close to the rates that had held true for years.

In short, the rates dropped from 9 percent to 6.5 percent for a time then rose back to nine percent, a rate that, at that time, was attractive.

The difference this time is that the market is now accustomed to rates in the high 3 percent to high 4 percent range, as those rates have been around for years.

Further complicating the issue is that the borrowers are millennials and they take longer to purchase homes than buyers did in the 1990s since they are more likely to attend graduate school and marry much later.

Additionally, they are more mobile and do not share the “American Dream” concept with Boomers and even Gen Xers.

When rates rise, it will have significant impact on housing. Prices will stabilize then slide somewhat downward.

I think that is what 2017 has in store. Until then, borrow all you can. (Sorry Dave)

Sale of the Week

3405 Belmont Avenue sold for $925,000 last week after some five months on the market.

Cindy Garvey of United Country-Leipers Fork L&H was the listing agent, and the buyer worked with Cindy, as well.

While Belmont Boulevard and Leiper’s Fork are not in the same real estate market, the respective areas draw many in the music business, and Garvey has a solid reputation for working with creative types.

Anyone checking tax records or who knows jack about music would know that the house was owned by Jack Music Inc., and its owner knew Jack about music having created some of the best music of all time. The property was the home and recently a studio of Jack Clement, known to his friends as “Cowboy.”

For those unfamiliar with Cowboy, his website gives the following overview of his career, “from the signature horn riff of ‘Ring of Fire” to the wild abandon of the Killer doing “Great Balls of Fire” to Satchmo to Bono, from working with Pop Stoneman, whose first recordings were on Edison cylinders, to deejaying a show on satellite radio. That pretty much covers it.” And it does.

With a personality as big and eclectic as that of Jack Clement, the home worked against itself somewhat, as listing agent Garvey noted that it was the “historic home and recording/music studio… all set up and ready to.”

She also described the various utility bills for the main house, the basement apartment, and the studio upstairs.

While anyone would be in awe of the history of the house, few are in the market for a house with a studio and an apartment. Hence, the overall market appeal was limited to someone who shared Clement’s interests, wanted to reside in a museum or is going to spend another $300,000 or so unjacking it.

Listed for $1,685,000, the property sold for $925,000.

Overall, the structure has 5,400 square feet with four bedrooms and four bathrooms on 1.530 acres. None of data bodes well for its restoration. We will have to wait and see.

Richard Courtney is affiliated with Christianson, Patterson, Courtney and Associates and can be reached at [email protected]