Archive for Mortgage Information
Shopping for the Best Mortgage Rates
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Are you enticed by the mortgage interest lowest rates in decades? If so you’re not alone, but they are often out of borrowers’ reach. Lenders base their rates on perceived risk. Only if you can show you’re low-risk would you qualify for a rate that matches those seen in headlines.
If you’re looking for the lowest available rates consider these basic factors:
- Credit Score: The ideal FICO score is around 740 or higher. This will put you in the best place for pricing.
- Points: 1% of the loan amount is a point, and by paying points you can reduce your mortgage rate. Be sure to ask for a zero point quote as well to compare the two rates.
- Property Types: Such property types as duplexes, condominiums in newer buildings or with lower down payments, commercial properties or non-owner occupied properties come with higher rates.
- Down Payment: Experts say putting down at least 25% could lead to more attractive pricing. Lenders offer different breaks on rates if equity is higher.
- Loan Length: ARM and 15-year loans are often lower than those on the 30-year loan. Consider how long you plan to live in the property and weigh your options.
- Other considerations:
- Lock-in: You may receive a lower rate for a shorter lock period 30-45 days rather than the usual 60 days
- Additional ownership costs, taxes, insurance and maintenance.
Inspired by New York Times Article by Vickie Elmer published January 12, 201
Mortgage Market Trends for week ending December 30, 2011
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MARKET RECAP
The news is understandably slow the week between Christmas and New Year’s Day. The most notable release was last Friday’s news on new home sales, which rose to an annualized rate of 315,000 units in November, a 1.6-percent gain over October.
To be sure, we have a long way to go until we reach the normalized construction rate of 1.5-million units per year. Nevertheless, we expect the new-home market to gain pace in 2012. After all, there are only 158,000 units in inventory. Even at the current slow sales pace, this equates to a record low six-month supply
Over the past three years, new-home construction has fallen far below historical norms and also below the level needed to keep pace with population growth. The fact is our country gains roughly 2.7 million people and one million new households annually.
You might not see supply as a problem. We are all familiar with the glut of distressed properties. Indeed, Bank of America expects eight million distressed homes to come to market over the next four years. These homes, we’ve so often heard, will continue to depress new home construction.
We view B-of-A’s outlook with a skeptical eye. There is a likely prospect that many of these distressed properties will simply go away. Destruction is too frequently overlooked in many supply projections. A house is not a permanent structure. Many are destroyed by fire, wind and flood each year. Many more are lost through simple decay and abandonment. Based on U.S. Census data, 300,000 homes are lost annually. That number will surely rise in years to come.
In short, the math – low inventory plus more households minus more home destruction – suggests to us a rebound in new-home construction. We are not alone in this contention, either. Wells Fargo projects that housing starts will continue to rise each year for the next five years before reaching once again the normalized construction rate of 1.5-million units annually by 2017.
Of course, projections are one thing, betting on those projections is another. Here, we see an encouraging trend. Big money is starting to wager on housing. The Wall Street Journal reports that many large hedge funds are investing billions in housing-related investments. Other investors have followed suit. Shares of homebuilders are up 30 percent over the past three months, making them one of the best performing investments in the market.
Up For A New Year
As we approach the end of the old year nearly all of us stop to ask, “How will the new year unfold?” Of course, none of us know with any certainty the answer to that question, but it can be insightful (and fun) to ponder. So, how will 2012 unfold, at least as it pertains to the housing and mortgage markets?
Both markets will obviously be influenced by economic growth, which, in turn, will spur job growth. We see a pick up in economic growth and job growth in 2012.
The economy has been growing at a sluggish rate for too long now. The United States is unique in that Americans tire of pessimism quicker than most other cultures, and then we do something about it. In our opinion, rising consumer confidence points to a lot of pent-up demand that is waiting to bust loose, and will bust loose in 2012.
A pick up in demand, in turn, necessitates new hires. In fact, a recent survey by CareerBuilder.com found that nearly one in four employers is keen to add new permanent full-time employees. These employers are simply waiting for a clear sign the coast is clear. We think they will get that sign in the first quarter of 2012.
Greater economic activity will obviously impact the housing market. We see accelerated sales volume in both the new and existing home markets. We also expect to see prices stabilize in the first half of the year, and then appreciate perceptibly in the second half.
As for the mortgage market? This is much more difficult to call. The Federal Reserve has stated it intends to hold rates low through 2012. However, all it takes are a few persuasive signs that the economy is back on track, and the Fed could easily backtrack from its stated goals. All we can say is that we would be much less surprised to see mortgage rates 50 basis points higher six months from today than 50 basis points lower.
Graph Courtesy from NY Times in an article by Vickie Elmer December 29, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
What’s The Difference Between Being Pre-Qualified and Pre-Approved For A Mortgage?
Posted by: | CommentsPeople often confuse the first two stages of the mortgage process. Often they get pre-qualified and mistakenly believe they are pre-approved. So what’s the difference?
Pre-Qualified: This is the first step in the mortgage process. You talk to a lender and give them overall numbers regarding income, debt and assets. The lender will evaluate the information and give you an idea of how much and what type of mortgage you qualify for. This is sometimes done over the phone and is not a sure thing, only a ball-park of the amount you might expect to be approved
Pre-Approved: Is much more involved. Requires an official application and even sometimes a fee; documentation and extensive check on everything you’ve put on the application as well as your current credit rating. At this point, if approved, you’ll receive an official commitment in writing for an exact loan amount, with conditions.
Generally, getting pre-qualified before you start looking gives you a starting price you can afford so you’re looking at only properties at or below that price. Getting pre-approved puts you in a stronger position in offers and negotiations and saves some time.
The loan commitment is the final step in the process. This approves you the buyer to a specific property. Your income and credit profile will be checked again to ensure nothing has changed since the initial approval. It is only issued when the bank is certain it will lend you the money.
Mortgage Market Trends for week ending August 26, 2011
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MARKET RECAP
The woes of homebuilders and anyone dependent on home building continue. The July report on new home sales shows that the annual sales rate has fallen to 298,000 units, hitting a five-month low. The good news is that supply isn’t expanding. In fact, only 165,000 homes are in inventory. This is a record low and a 6.6-month supply at the going sales pace.
Homebuilders face a cluster of problems: bargain-priced foreclosures; higher lending standards; and skittish buyers, many of whom have been further put off by the recent stock market sell-off. Mounting concerns of a double-dip recession and rising cancellation rates have only exacerbated homebuilder worries. The chief concern now is that builders could be forced to cut prices, something they’ve been fighting tooth-and-nail.
Despite the recent spate of bad news, home prices continue to hold their own, and in many instances are moving higher – at least month-over-month. The FHFA home price index for June increased 0.9 percent after posting 0.4 percent and 0.3 percent increases in May and April respectively.
However, does the slump in new and existing home sales portend falling home prices? We remain optimistic that prices will hold. People are understandably wary about big-ticket purchases, like a home, because of slow job growth and stagnating economic activity. But all have a reservation price (a price they will not sell below). Houses (that is, habitable houses) won’t be given away; they’ll be taken off market if the sales price doesn’t exceed the reservation price.
Reservation prices could fall and the monthly price trend could reverse, of course. That said, we think most of the bad news is baked into the system, so we don’t think there will be any heavy discounting. In short, we still think a home is a worthwhile investment in today’s market.
Mortgages have also been holding a price trend. Bankrate reported that its weekly survey on rates posted another all-time low. It’s worth noting, though, that after the survey was released, yields on the 10-year Treasury note spiked 10 basis points, which points to higher mortgage rates in the next survey.
A surfeit of negative news has kept mortgage rates low. This has lead many analysts to opine that ultra-low mortgage rates are the new norm. We think this is a dangerous way of thinking (which we’ll explain below) and that it is still best to take advantage of rates unseen in over 50 years.
Is This the New Norm?
We’ve gone down the higher-inflation, higher-interest rate road many times in the past, only to find ourselves doubling back. There is an interesting trend occurring with banks, though, that could persuade us to go down it once again.
One of the more vocal criticisms of banks is that they haven’t been lending as much as they should. There is some validity to the criticism; banks have been squirreling away a higher amount of reserves with the Federal Reserve, which has attenuated loan supply and, therefore, money supply, thus keeping inflation in check.
Data released by the Federal Reserve show this period of containment appears to be ending. In other words, excess bank reserves are leaking into the economy and money supply is growing. Because we operate in a fraction-reserve banking system, which means one dollar can be sufficiently leveraged to produce nine more; more reserves put to work can quickly raise inflation pressure.
This all might seem abstruse to the layperson unfamiliar with the intricacies of the Federal Reserve and fractional-reserving banking. All we are saying is that it is folly to write off price inflation and the possibility of higher mortgage rates, because there is no “normal” when it comes to financial markets.
Graph Courtesy from NY Times in an article by Vickie Elmer August 26, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
The Mortgage Maze – A Road map to approval
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In years past, nearly anyone who could fog a mirror could qualify for a mortgage. Not anymore. Those days are long gone. From stricter underwriting to more documentation, face it, getting a mortgage isn’t as easy as it once was.
Be prepared is the name of the game.
- As part of your real estate team, in addition to an attorney, financial advisor/accountant and real estate broker, seek out a mortgage professional you can trust. They will be privy to all aspects of your financial life.
- Check your credit score and review credit reports
- Gather your Documents
- Two years of complete Federal Tax Returns including W-2s
- Two recent and consecutive period’s paystubs
- two complete and consecutive months bank statements
- two complete and consecutive months brokerage account statements
- one recent quarterly retirement account statements for each retirement account
- photo ID
- Mortgage professional will review and point out any potential red flags
- Complete mortgage application and submit to lender.
- Get a pre-approval letter.
With the approval letter in hand, your real estate broker will have a better understanding of the price range you qualify and can show you properties that fit your needs and budget. Your broker will be able to negotiate from a stronger position. Before you know it, you’ll be moving into your new apartment.
Adapted from an article written by Richard Martin/SVP/DE Capital Mortgage an affiliate of Prudential Douglas Elliman.
Government Guarantee of Large Mortgages Ends September 30th
Posted by: | CommentsThe Federal Government backed new mortgages as large as $729,750 for the last three years in high cost states such as New York and others. As of September 30, this will no longer be the case.
According to this New York Times article and the National Association of Realtors, there is likely to be downward pressure on prices in a lot of markets. The National Association of Realtors plans to lobby heavily to get an extension on the loan guarantees.
It is my belief, however, in the Manhattan market, where over 70% of apartments for sale are Coops, this may be a tempest in a teapot. Most coops require anywhere from 20% to 50% down payments, and most coop boards insists on high income to debt ratios, as much as 25% to 30% maximum debt to income. Likewise, to get financing on a Condo, lenders have been asking for 20% or more as a down payment.
While other areas in the country may feel the pinch, Manhattan is likely to be unaffected by this change in Government guaranteed mortgages.
Mortgage Vocabulary for First-Time Coop and Condo Buyers
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Confused by mortgage lingo? HUD has an entire glossary for you:
Here’s some samples:
Points: 1% of the loan amount to lower the interest rate, or cover some fees involved with the transaction
Float-Down: After locking in your rate, the lender may give you the opportunity to lower your rate if the market rate falls.
Margin: On Adjustable rate loans, the margin is how much above the index you are going to pay.
Cap: On Adjustable rate loans, the cap is the most the rate can increase in one year.
Walls in Insurance: additional insurance that banks may require insuring what’s inside the apartment.
See the full article and video on ny1.com.
Not Your Parents’ Mortgage
Posted by: | CommentsIt seems like every time we turn around, the rules are changing on home mortgages. Gone are the days when we could find an apartment we wanted, then find a mortgage to fit. Now, you should talk to a mortgage banker before you even start looking to be sure you are looking in the right price range. Where there were many different types of mortgages, now there are two basic types: Fixed or Adjustable rate. While there is still some choice among different types of each, there aren’t as many as before.
Plan on putting up at least 20% for a down payment for a conventional loan (more if you’re looking at coops). You might be able to qualify for a government-backed loan or private mortgage insurance if you’re strapped for a down payment, but it will cost you more in the long run.
It’s entirely possible the applicant could qualify, but the building won’t.
Scrutiny is the name of the game when it comes to a mortgage these days; consistent, stable income, high credit score and enough assets to cover not only the down payment, but also closing costs and reserves. Even the coop or condo building financials will be examined very closely. It’s entirely possible the applicant could qualify, but the building won’t.
Mortgage Market Trends for week ending May 13, 2011
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MARKET RECAP
Zillow.com had many in the media – from the Wall Street Journal, to Bloomberg, to the New York Times – talking this past week, and they were talking mostly about home prices.
Home prices, according to Zillow, posted the largest decline in nearly three years in the first quarter of 2011, with prices falling 3 percent compared to the fourth quarter of 2010. Zillow’s data also show that prices have fallen nationally for 57-consecutive months.
The economists tell us that prices are deteriorating because of the glut of foreclosed properties selling at a discount. Mortgage companies Fannie Mae and Freddie Mac have sold more than 94,000 foreclosed homes during the first quarter, a new high that represents a 23-percent increase from the previous quarter. More properties could be on the way: Fannie and Freddie together were holding 218,000 properties at the end of March, a 33-percent increase from a year ago.
This latest dour data on prices prompted many economists to recalibrate their forecasting models, pushing back their estimates on when the housing market will actually bottom. One economist, quoted at Housingwire.com, said, “We aren’t even halfway through a 10-year transition in the housing market.” Zillow’s in-house economist believes prices won’t hit bottom before next year and expects that “they will fall by another 7 percent to 9 percent.”
Distressed properties are an issue, to be sure. The NAR reports that d istressed property sales accounted for 39 percent of all transactions in the first quarter, up from 36 percent a year earlier. While good for sales volume, distressed properties are dragging down prices. In the first quarter, the median existing single-family home price was $158,700, down almost 5 percent from $166,400 one year ago, according to the NAR.
The rise in the number of distressed properties means more lower-priced homes, more home owners with negative equity, and, thus, even more distressed properties. It sounds like a vicious circle, except it isn’t. Most sellers have reserve prices. They won’t sell their home at just any price, regardless if they’re underwater or not. That also goes for REO properties. People are rational; they want to maximize their returns, and maximizing returns often means remaining on the sidelines instead of selling.
We still don’t back down from our contention that prices are at or near their lows. Could the price drop a little further after a purchase? Yes, but that can happen with any investment. What’s important is where the investment will be seven-to-10 years from now. We believe that residential real estate will be higher, and possibly a lot higher.
We also believe that the housing market would be in much better shape today if more people capable and willing to buy could. We are speaking of overly tight lending standards. The average credit score on loans backed by Fannie Mae stood at 762 in the first quarter, up from an average of 718 for the 2001-2004 period.
Of course, we are interested in speaking with anyone who wants a mortgage who understands the unique opportunity to get a loan at a low rate and to buy a home at a low price. There is a lot we can still do, but there would be more we could do if the tethers were only reasonably lengthened.
The Great Protector from Inflation
Inflation is on many people’s minds these days, including ours. Investors are expressing the most obvious concern, revealed in their seemingly insatiable demand for gold and silver – two historical antidotes to the ill-effects of inflation. Both metals have nearly doubled in price over the past few years.
Real estate is another great protector. Returns on residential real estate have typically averaged a return that was 1-to-2 percent above the rate of inflation over the past century. That’s easy to forget, given the off-putting news on recent price declines. But the message is worth remembering, especially at a time when investors have been piling into richly priced gold and silver. We think real estate is the better value and the better protector from inflation at current prices.
Graph Courtesy from NY Times in an article by Maryann Haggerty May 12, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
Mortgage Market Trends for week ending May 6, 2011
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MARKET RECAP
There wasn’t much news on housing sales this past week, so markets focused on prices instead. The chatter centered mostly on fear of the dreaded “double dip.” The fear that home prices will continue to fall and will make new lows.
There is some validity to the fear, if we consider only national numbers. Clear Capital reports that national prices fell 5 percent in April compared to the year-ago period. Over the past nine months, national prices are purported to have declined 11.5 percent.
Distressed properties were to blame. Clear Capital says that REO sales accounted for 34.5 percent of overall sales nationwide after declining to nearly 20 percent in the middle of 2010. This same pattern surfaced in 2008, when REO saturation grew from 20 percent to 32 percent by the end of the year.
It’s an apples-to-oranges comparison (2008 to 2011) in our opinion. Back in 2008 and early 2009, the entire nation was a mess: markets converged and they all dropped in tandem. Today is different; housing markets and economies are more localized. We think Michael Fratantoni, vice president of research and economics for the Mortgage Bankers Association, put it best when he described today’s market as a “tale of two cities.” Home prices are stabilizing and rising in economically viable parts of the country, while other areas remain paralyzed by high unemployment and shadow inventories.
Every region of the country has shadow inventory, but it is proportionally high in parts of California , Michigan , Nevada , Florida , and Arizona . These states still have a lot of work to do to rid themselves of distressed properties. The difference between 2008 and today is that what happens in Vegas really does stay in Vegas. In other words, don’t let national price trends keep you awake, particularly if the comparisons are year-over-year.
It remains a buyer’s market, though, and we’d like to see buyers take advantage of a stable lending environment. In fact, rates actually eased lower this past week. Some credit-market commentators pointed to the death of Osama bin Laden for the lower rates, the rationale being that investors were fearful of a market-churning retaliation, so they flocked to U.S. Treasury securities.
It’s difficult to say for sure why rates dropped; there are simply too many factors that move markets over the short term to say which one is most influential. We prefer to keep our eye on the long term, which is being driven by soaring consumer prices, rising gold prices, and falling value of the dollar. To us, they add up to rising mortgage rates. And we’re not alone in that assessment: the MBA forecasts a 30-year, fixed-rate mortgage rate of 6.2 percent next year.
Hot versus Cold Markets
It’s an age-old dichotomy: some people prefer to buy into the latest trend; some people prefer to go against the crowd and buy what few people appear to want.
In the past couple issues, we’ve noted that the residential rental real estate market is turning, which means more people are buying rental properties. Does that mean that the rental market is now a hot market? We don’t think so. We think it is more of a developing market. That is, it is garnering more interest among more people, but it is still not hot. A hot market to us is the commodities market, gold in particular, and the stock market. Both have nearly doubled over the past two years.
Residential real estate, if not a cold market is a cool market, and we think these types of markets offer more reward for less risk. We have to look no further then the past two hot markets – the stock market of 1999 and the real estate market of 2006 – to realize how dangerous it can be to buy into the hot market.
Of course, it is impossible to accurately predict how hot or cold markets can get, but if we were to bet on which would be the hot market two or three years from now, our money would be on the real estate market.
Graph Courtesy from NY Times in an article by Maryann Haggerty May 6, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
Mortgage Market Trends for week ending April 22, 2011
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MARKET RECAP
We stated previously that an upturn in sales would mark the start of the spring buying season. We are happy to report that signs are appearing to support our premonition. RE/MAX reported that home sales increased by double-digits in March from February in all but one of the 54 U.S. metropolitan areas it covers. This represents a complete reversal from January, when none of the 54 cities saw even single-digit monthly sales increases.
The National Association of Realtors corroborated Re/Max’s bullish report with one of its own. The NAR’s data show that March was a decent month for existing home sales, with sales up 3.7 percent to an annualized rate of 5.1 million units. Prices also firmed slightly, up 2.2 percent, to a median reading of $159,600. More homes were on the market, 3.55 million, but the solid rise in sales dropped the supply to 8.4 months.
The beleaguered homebuilders could also see an improved selling market as we head into the late spring/early summer months. Housing starts in March rebounded 7.2 percent following a monthly 18.5-percent drop in February. The March annualized pace of 549,000 units came in significantly higher than analysts’ estimate for 510,000 units. The improvement was led by a monthly 7.7 percent boost in single-family starts. More encouraging, housing permits gained 11.2 percent after decreasing 5.2 percent in February.
Over the past six months, the monthly housing data have shown improvements, or at least stabilization, in pricing and sales. Of course, real estate is seasonal and year-over-year comparisons are usually the focus. On that front, the data are generally lower. However, it is not an apples-to-apples comparison. This time last year, we were still operating in a more subsided market, thanks to the federal tax credits, so it’s really meaningless to compare the normalized market of today to the tax-credit-supported market of yesterday.
We could also argue that we are still not operating in a normalized mortgage market. Mortgage rates remain low, and have remained low longer than we had thought. The Federal Reserve has added unprecedented liquidity and held rates low through its open-market operations of buying Treasury and government agency securities. That said, we still believe that mortgage rates will play catch up with rising prices in the coming months.
Credit standards, which we see as the biggest impediment in the housing recovery at this point, are also not normalized. March posted a record all-cash sales rate of 35 percent. That tells us that too many people are being excluded from the market. Our biggest wish for the coming months is for more lenient standards and more private mortgage investors. Right now, the mortgage market is having a sale on size-10 shoes only, which is great if that’s your size, but not so great if it isn’t.
The Great American Downgrade
It seems unfathomable, but it happened nonetheless: Standard & Poor’s changed its outlook on U.S. Treasury bonds from “stable” to “negative” and warned it might downgrade the U.S. debt from its top AAA rating if government officials don’t get the country’s budget deficit under control.
Does that mean that we are on the road to Zimbabwe? No, but a potential downgrade does have some implications for credit markets. It could pull nervous money from the bond market and place it in the stock or commodities markets. (Gold is above $1,500/ounce for a reason.) More than anything, the downgrade threat is a wake-up call to start getting the United States’ fiscal and monetary house in order. That means ending our low-interest rate and easy-money ways.
The world is focused on us to see if our government can take this deficit seriously and address it coherently. In short, seriousness and coherence are precursors to rising interest rates, and that includes mortgage rates.
Graph Courtesy from NY Times in an article by Maryann Haggerty April 21, 2011. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
Mortgage Market Trends for week ending December 17, 2010
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MARKET RECAP
Much ado was made about a CoreLogic report on foreclosures this past week. The headline went something like this: “The number of U.S. homes worth less than the debt owed on them dropped in the third quarter.” That would seem to get the spirits rising, until you read past the first paragraph and discover the improvement was largely due to mounting foreclosures rather than rising property values.
Still, the report offered some hope, noting that 22.5 percent of homes with mortgages, or roughly 10.8 million units, were underwater at the end of the third quarter, which is better than the 23 percent, or 11 million homes, reported to be underwater at the end of the second quarter.
We’ll offer our usual caveat with national numbers: they rarely pertain to any particular local market. Indeed, the usual suspects – Nevada , Arizona , Florida , Michigan and California – heavily skew the numbers on negative equity. CoreLogic reports that 67 percent of Nevada homes with mortgages are underwater – an incomprehensible amount to those who reside in cooler, damper environs.
We have two options for reducing negative equity: price appreciation or disposition. The aforementioned five states will likely rely more on the latter. However, that doesn’t mean that everyone is doomed to the same fate. At the least, price inflation – one of the Federal Reserve’s stated economic goals – will eventually seep into the housing market to stabilize prices.
Homebuilders will continue to suffer with foreclosures and negative equity, which is why sentiment among this group continues to dwell in the basement, and will likely continue to dwell there for the foreseeable future. This despite the Commerce Department reporting that housing starts rose 3.9 percent, to a seasonally adjusted annual rate of 555,000 units, in November. Unfortunately, permits decreased by 4 percent.
Homebuilders are also less than thrilled with mortgages rates. Bankrate.com reported that rates on the 30-year fixed-rate loan hit 5 percent nationally – the highest in seven months. With all due respect to homebuilders, we don’t view rate increases as being all bad. Yes, it has increased teeth gnashing by those borrowers waiting for 3.5 percent mortgages, but rate increases are a sign of economic improvement. A stronger economy makes business investment more attractive, thus drawing funds away from bond markets. The result is lower demand for bonds, which translates to a drop in bond prices and a rise in yields and interest rates (which is good for savers, by the way).
The best advice we can offer at this point is to lock in today’s rate. Admittedly, we could see a pullback, but we wouldn’t anticipate it being much of one. Too many indicators point to a higher-rate environment.
Staying Ahead of the Trend
People are naturally attracted to trends: the longer a trend has been sustained, the more likely they believe that trend will be sustained into the future. It can be a misleading way of perceiving markets, for often it is the exact opposite: the longer a trend has been sustained, the more likely it will reverse.
The problem is that impending change is often imperceptible, though it is there. Simply vet the data over the past few months, and you can sense a change. Retail sales are rising; economic activity continues to build, evinced by Federal Express’ bullish outlook; and more businesses are planning to hire, evinced by a Business Round Table survey that finds that 45 percent of CEOs plan to hire within six months — the highest percentage for that group in eight years.
That said, this remains a favorable environment for homebuyers, investors, and borrowers. We all prefer to buy low and sell high, but we can buy low only when things are on sale; things are on sale when pessimism rules, as is still the case today. However, when economic indicators have trended higher and optimism rules, nothing is on sale. Sure, it feels better to buy when everyone is optimistically inclined, but doing so is rarely profitable over the long run.
Graph Courtesy from NY Times in an article by Lynnley Browning December 19, 2010. Data and Commentary provided by Fred Ashe, from DE Capital Mortgage.
