Some good news (believe it or not!)
January 24, 2008 by Craig KingThese days, we have to take our good news where we can find it. So which of today’s major stories do we focus on: the decline of existing home sales to a nine-year low, the first annual price decline on single family homes in 40 years, or the decline of mortgage rates to their lowest level in four years?
Given the seemingly endless stream of negative numbers we’ve discussed here, the interest rate news is welcome relief. Maybe it’s not worthy of a ticker tape parade, but it may well help the market in several ways:
- It provides a possible way out for some of the 2 million homeowners who face ARM resets this year. For every home that avoids foreclosure, we stave off a sickening chain of events that ripple through the industry, hurting everybody.
- It reminds people that – subprime crisis not withstanding – there is mortgage money to be had at some of the lowest rates in history. That could just bring some buyers in out of the shadows.
- People are once again starting to refinance at lower rates, either reducing their debt more quickly or freeing money they can spend in other ways, stimulating the overall economy.
- It immediately makes homes more affordable. The lower the rate, the more the buyer can afford. This will both stimulate sales and help shore up prices.
I wouldn’t dream of making any predictions, but it wouldn’t surprise me if, a couple of years from now, we look back on this week as the bottom. To be candid, it wouldn’t surprise me if things kept going downhill for a while either. A train like this doesn't turn on a dime.














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