A few years ago, the real estate bubble had not yet emerged. Instead, there was a more flat, tempered housing market where home values were not rising at the pace experienced after the boom and subsequent bubble. That was then.
This is now.
Unlike the trend home buyers and sellers observed associated with an economy propped up by quickly increasing home equity values, the opposite is now the case. In fact, some might argue that the downhill ride back to more stable home values has been, and will continue to be, a steeper more painful slope than the angle at which the economy first rose. According to an article written by Michael Carliner at Bloomberg.com, homeowners might end up having homes underwater for a number of years:
"Rebounds in housing have typically been driven by declines in mortgage rates. Not this time. Rates on a 30-year mortgage have dropped to about 4.5 percent - the lowest since the early 1950s - with little effect. Tax credits and other programs to encourage buyers have provided only a modest, temporary boost."
It's difficult to determine the bottom of this particular downward housing economy, but it's safe to say that sellers with homes for sale might benefit by sitting through the continuing drop. While speculative property investors may not enjoy this option, primary residence homes can take advantage of an eventual pricing rebound once the economic bottom is finally reached. And while you're waiting, there has simply been no better time than now to take advantage of the lowest prime lending rates ever. Here's a breakdown of the latest loan rates indicated by the Mortgage Bankers Association as mentioned at MarketWatch:
"The refinance share of mortgage activity increased to 81.4% of total applications from 78.1% the previous week," the group said, which is the highest refinance share observed since January 2009.
The group also said that the average contract interest rate for 30-year fixed-rate mortgages increased to 4.60% from 4.57%, with points increasing to 0.92 from 0.89 for 80 percent loan-to-value ratio loans. The effective rate also increased from last week."
Apparently, it also appears that the MBA (Mortgage Bankers Association) is appreciative of the U.S. Senate's efforts to stabilize FHA multifamily and single family loans. However, the core overlying challenge facing the overall economy is that it is 1) artificially propped up by real estate prices; and 2) struggling to offset the naturally declining real market values with bonified, long-term service sector and manufacturing jobs.
Now that we're facing a very possible, very real double-dip recession, homes for sale will do nothing but make the downhill ride much, much faster. Imagine a bicycle without brakes.
