Mortgage Rates Up, Median Home Price Down.

Posted: October 20th, 2009 | Author: | Filed under: Economy | Tags: , , | No Comments »

Mortgage Rates.

According to a recent Bankrate.com article, the average rate of a 30 year fixed rate mortgage is up 10 basis points (0.10%) to 5.32% and a 15 year fixed is also up 10 basis points, to 4.7%.

It’s all due to economists declaring that the recession is over, lack of jobs not withstanding.

This week, four in five economists surveyed by the National Association of Business Economics said that the recession has ended and the economy is in recovery.

Don’t expect the rates to jump too far too fast though. The lack of a job market means more homeowners having a harder time finding income and losing their homes to foreclosure or short-sale. Any improvements in the rate of delinquencies and foreclosures will be slow in coming.

BankRate.Com weekly national mortgage survey Oct. 14, 2009
Results of Bankrate.com’s, weekly national survey of large lenders and the effect on monthly payments for a $165,000 loan:
30-year fixed 15-year fixed 5-year ARM
This week’s rate: 5.32% 4.7% 4.76%
Change from last week: +0.10 +0.10 +0.10
Monthly payment: $911.14 $1,274.08 $854.76
Change from last week: +$10.23 +$8.48 +$9.92

Home Prices.

While mortgage rates have risen, the median home price has fallen from $198,100 to $172,200 and is expected to rise gradually to $185,500 in 2012. Jay Brinkmann, chief economist for the Mortgage Bankers Association, also believes that it will take over 4 years for prices to get back to their 2008 level.

This is great news for buyers, and lousy news for sellers.

If this report and its forecasts are correct, it will be a buyer’s market for the next couple of years, and interest rates are not likely to become drag on home sales any time soon.

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Record Drop in Home Prices Not all it Seems?

Posted: February 17th, 2009 | Author: | Filed under: Economy, Real Estate | Tags: , | No Comments »

Here’s an article from the AP that now reads “S&P index shows plunge in November home prices“, though when I found it yesterday the headline was “S&P index shows posts sharpest decline in home prices on record”!

I think you’ll agree the latter is a bit more eye catching, if not dramatic.

record drop in home prices not all it seems graph 187x300 Record Drop in Home Prices Not all it Seems?The point is though, that there really isn’t much of a story here since the index they are talking about (the S&P/Case Shiller Home 20-city housing index) only covers prices since 2000!

Essentially, after housing prices posted one of the largest (if not THE largest) increases in history, they have now falling dramatically. Sorry, but isn’t this to be expected? Assets don’t increase in value forever.

This is like using the value of the NASDAQ from 1998 – 2003! Using an index with an 8 year history is akin to basing your entire world view on your experiences in a single week of your life! There’s no historical perspective here.

We already know that the housing market is in decline, but skewed statistics like these don’t help the situation.

Interestingly, the index itself goes back 20 years, so I’m not sure why they only cover from 2000 in this article…

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