Positives and Negatives in Real Estate

There was some good news and not so good news for the real estate market yesterday which added to the uncertainty in the future of the world economy.

The Bad
Existing home sales fell by over 12% from a month earlier which was the biggest month over month drop this year. One thing to point out is the fact that a drop in home sales is common for this time of year but the magnitude of the decline points to many hesitating to jump into the market in light of the financial turmoil and debt ceiling debacle.

The Good
On a brighter note, Freddy Mac announced that 30 year mortgage rates had fallen to a 50 year low. The Feds decision to keep rates low for at least the next year and investors looking for safe investments has kept interest rates flat.
These new lows will allow potential homebuyers the ability to afford to buy a home who would otherwise have been priced out of the market.

The Bottom Line
The large decline in home sales may be an indication that confidence in the housing market is fading fast. While the new lows in rates will probably not spur a run on home sales, investors are still buying properties to fix and sell for profit. Investors usually come out when we’re close to a bottom with main street following behind. Do they know something we don’t?