DON’T LOSE TRACK

October 26, 2006

There have been so many write-ups and reports on a dismal real estate market.  Don’t lose track of a critically important part - Mortgage rates have been quietly falling and have been doing this for several weeks.  The rates are at their lowest point in half a year.  They are just barely a percentage point above the 40-year lows we’ve recently experienced.

New mortgages and pending home sales have increased - and the unemployment rate has just declined to 4.6 percent.  If this is supposed to be a housing bust - then what kind of bust is it anyway?  It’s just as many have predicted, it’s a ‘correction’ of sorts.  The economy seems to be continuing to be quite strong, and new jobs are being created.

Sellers are still grasping at the reality that if they wish to sell their home they may have to adjust the selling price a bit.  It is putting the market back in a more ‘normal’ climate.  Part of the source of the confusion is coming from the media who seem to be overly dramatizing what is a normal and rebalanced cycle.  “The financial press and TV news are portraying it as a catastrophe”, says Mike Moran, Chief Economist of Wall Street’s Daiwa Securities America.  “Housing is going through a correction that’s badly needed,” he said.

“Serious sellers and buyers shouldn’t be misled by prediction of imminent crashes”, said Doug Duncan, Chief Economist of the Mortgage Bankers Association, “the rhetoric is just way overwrought.”  quotes source:  Kenneth Harney-San Diego Union Tribune

Posted in Real Estate