This morning my alarm clock went off at 6AM, like every other day. Like most people these days, according to recent marketing studies, I reach for my Iphone to get a feel of what the mood in the financial markets will be like by the time I reach my office. Today the overall mood was grim at best. The National Mortgage and Real Estate Reports websites posted depressing reports quoting that the Case Schiller Report showed a national negative, or decrease of 0.2%  month over month, and a negative of  3.1% year over year in home values. As a homeowner and mortgage professional this is sobering news. The reports over the last couple of weeks had been extremely positive with regards to the economic recovery, so the grim news took me by surprise especially since I had noticed an increase in activity during those months in my business.

As soon as I had access to a laptop I logged on to retrieve the Case Schiller report, which is generally regarded as the gold standard of information regarding improvement or deterioration in home values. While the national report did not look good, I was pleasantly surprised to read a quote on page 2: “The Southwest continues to be a bright spot, with San Diego posting its eighth consecutive monthly increase”. I have written on numerous other occasions about the disconnect between the national and local real estate reports. Today’s numbers were a perfect example.

The bigger question remains: With the Fed exiting the Mortgage backed securities sometime in March, and the tax credit going away in April-June will the market sustain the recovery? According to a report from CNBC this morning, wall street’s hedge funds are looking more than ever at the real estate market as the most stable place to hedge funds. That was quite a relief to hear since the fear still exists that there will be no investors after the Fed exists the market and the government is currently buying 99% of the mortgages, $1.25 trillion.

As real estate and mortgage professionals, we still have a huge responsibility to educate every buyer about what goes on in our local markets in order to help move the economy forward. History has shown that the housing industry is one of the first indicators of any recovery. We must highlight the difference between cost and price. If rates go up in the future, chances are that the same buyer will have to settle for less house because their purchasing power will decrease.

Similar Posts:

Share