Housing market slump and rebound
Why everyone is so surprised by the 2.6 percent fall of existing home sales in June? In my estimate it is rather mild. Of course, if it was bad enough in June when would be buyers could have locked reasonably low interest rates in the end of April and May to settle in their new homes well before school begins, imagine what is going to happen in July, August with already higher mortgage rates, and in fall with school season underway and likely even higher rates? Then of course, late fall and winter looks simply dreadful, because of ... well ... it is late fall and winter that are always slow times in housing market, and the Fed might still raise interest rate prescribing some medicine from Paul Volcker book.
The big question is if the Fed raises rates, but regardless what rebound and where to everyone expects of? There are so many unsold homes, it will take more than a million of new qualified buyers to move them. The up to $7,500 tax break for first-time home buyers who purchase between April 9 of this year and July 1, 2009 is nice but will hardly change the picture. First, these first-time buyers that number some say close to 3 millions, should be able to get mortgages which are not getting any easier. Second, they have to be motivated to buy at all, and why would they be? Someone has to convince them that their homes will hopefully appreciate, that their real estate taxes will not grow as fast as they have been, and that maintaining their house and paying utilities make sense for them financially versus renting or living with their parents.
Thu Jul 24, 2008 02:07PM | Copyright: www.bad-credit-advisor.com | More in Economy | Comments (0)
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