[naplesrealestate]

I was reading the WSJ this morning and came across http://online.wsj.com/article/SB125808220215546649.html article. The headline looks promising, cause mortgage rates are at a 5 week low and still below 5% for a 30 year fixed. However, if you keep reading beyond the headlines new mortgage apps are down to a nine year low. That does not bode well for us in the industry.

[Toby Lane]

I think it is because they extended the tax credit. All those people that were trying to get their loan done before Nov. 30th are now taking a break from looking. I have had several people tell me this.

[naplesrealestate]

That makes sense, but still in an already anemic environment, 9 year lows make me nervous. With real unemployment above 15% and GDP shrinking I see dark clouds ahead. The one thing that may work for me in my market is the weak dollar will be bringing in European buyers again.

[Toby Lane]

Originally Posted by naplesrealestate

That makes sense, but still in an already anemic environment, 9 year lows make me nervous. With real unemployment above 15% and GDP shrinking I see dark clouds ahead. The one thing that may work for me in my market is the weak dollar will be bringing in European buyers again.

My worry about the weak dollar is rates may start to rise. Talk about hurting the market. People are so used to rates in the 4's and 5's, they wouldn't know how to react if rates go to 6 or 7%.

[jamesww]

Originally Posted by Toby Lane

My worry about the weak dollar is rates may start to rise. Talk about hurting the market. People are so used to rates in the 4's and 5's, they wouldn't know how to react if rates go to 6 or 7%.

Well the good news is that Fed. sounds as though they are set on keeping rates low until evidence comes about showing a meaningful amount of inflationary pressure. And once inflation kicks in it will increase the cost of constructing a new home thereby assisting in encouraging prices to rise once again. People love to brag about how much their home went up so this will more than make up for the people that choose to not make a purchase because interest rates are higher. Just take a look at what happened during other high inflation periods in this country. Real estate values moved up and plenty of people made purchases despite the high interest rates.

[jamesww]

Originally Posted by naplesrealestate

That makes sense, but still in an already anemic environment, 9 year lows make me nervous. With real unemployment above 15% and GDP shrinking I see dark clouds ahead. The one thing that may work for me in my market is the weak dollar will be bringing in European buyers again.

Well that is what happens when you have Keynesian's pulling future demand into the market place. The drop in mortgage apps is no surprise to me since we pulled first time home buyers into the market pre winter. Most consumers with families do not make purchases during the winter. The winter months tend to be driven by first time home buyers and empty nesters. Empty nesters have gotten killed in the stock markets and so are much less willing to take a hit on their perceived home equity. This makes them hold out.

[johndale]

Originally Posted by jamesww

Well that is what happens when you have Keynesian's pulling future demand into the market place. The drop in mortgage apps is no surprise to me since we pulled first time home buyers into the market pre winter. Most consumers with families do not make purchases during the winter. The winter months tend to be driven by first time home buyers and empty nesters. Empty nesters have gotten killed in the stock markets and so are much less willing to take a hit on their perceived home equity. This makes them hold out.

After the winter, things might get back to normal again. But looking forward for more opportunities with these first time home buyers.