Housing market is not the stock market
January 4, 2009
With all the turbulence and losses in stocks and bad economic news in the headlines lately, you can easily lose perspective on what’s really going on in the real estate sector.
For example, new mortgage applications increased last week by 12 percent, according to the Mortgage Bankers Association. Applications from people looking to buy houses with FHA loans were up by 15.3 percent, while applications from purchasers seeking conventional mortgages rose by six and a half percent.
How could that be, with all the grim economic news? Well, remember that there is a huge pent-up demand simmering away out there for housing — especially from first-time buyers who want to scoop up low-priced deals.
When fixed interest rates drop — and last week they were down by a quarter of a percentage point — those buyers start doing the math and getting into the market with offers.
So here’s the key point to keep in mind as you try to make sense of the headlines: The stock market is NOT the housing market. It’s on a whole different set of tracks. And it’s been in a highly volatile state for more than a month.
Housing, on the other hand, has already endured its painful correction for two and a half years … is now pretty much stabilized … and is slowing moving toward its cyclical recovery.
REALTY TIMES – 11/18/08
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