Scott Sambucci

Why Are Mortgage Rates So High?

With mortgage rates already at historical lows, is dropping rates less than 100 basis points really going to spur demand? Probably not. In talking with hundreds of agents through my work, most agents will tell you that buyers are telling them - "I'm waiting for the bottom" not "Mortgage rates are too high."

I think you statement - "Long term recovery will only get started when homes are priced at values supported by mortgage rates sustainable over the next 5 to 10 years.." certainly supports this.

The price of money isn't the issue - it's the price of goods (homes) that is keeping buyers out. I wrote a bit about this myself last week as related to John Taylor's assailing of the Fed regarding lower interest rates: scottsambucci.blogspot...

Scary Foreclosure Numbers, Scarier Prospects

There's a pretty clear indication at a key market like Sacramento, active inventory levels are falling (it would seem due to foreclosures), and existing homes are continuing to drop their prices:

tinyurl.com/6xkbsu

In general, prices in the resale market are still correcting. Looking a Chicago over the past two years, the seasonal changes in inventory had almost no effect on the downward trend in prices, save for a break in price trend for a short time in the Spring.

tinyurl.com/5oalbo

Government Thinking Hard About 4.5% Mortgage Plan. Good!

The question with regard to buyers in the market, is it the price of money or the price of goods (homes) that are constraining housing activity? Couple that with more responsible lending standards and the fixed 4.5% lending rate may have only a marginal affect.

This article (scottsambucci.blogspot...) discusses these effects in more detail.

Fundamentally, interest rates are a reflection of risk and with lower interest rates, wouldn't this require that the 4.5% lending rate only be provided to buyers with the appropriate credit history? I thought that providing mortgage rates at below the buyer's identified risk profile was a main proponent to the current situation.

Housing Solution: Crashing Home Prices or Cheaper Mortgages?

Working in the real estate industry, I'm hearing lots of chatter among mortgage brokers and real estate agents thinking that cheaper money is going to spur demand and jumpstart the housing market. Seasonality is a problem right, but in the longer term, I side with a continued price decline as the mechanism that will begin clearing the market. I came across an interesting paper by John Taylor from Stanford that was rather critical of the use of interest rates to stimulate demand. More info on this here:

scottsambucci.blogspot...

Housing Solution: Crashing Home Prices or Cheaper Mortgages?

Working in the real estate industry, I'm hearing lots of chatter among mortgage brokers and real estate agents thinking that cheaper money is going to spur demand and jumpstart the housing market. Seasonality is a problem right, but in the longer term, I side with a continued price decline as the mechanism that will begin clearing the market. I came across an interesting paper by John Taylor from Stanford that was rather critical of the use of interest rates to stimulate demand. More info on this here:

scottsambucci.blogspot...