Step by Step, Inch by Inch
The "good" economic news of recent weeks is more about "better than expected." Still, it is looked at positively by markets hungry for the end of bad times. With the renewed positive slant, there is less talk about a double dip or about deflation. Last week, James Bullard, President of the St. Louis Federal Reserve Bank, said he sees a pickup in 2011. He also sees a reduction in the unemployment rate, spurred by rebounding business spending. As the economy claws its way back, money is starting to shift out of the safe haven of the bond market and over to stocks. This is going to cause bond prices to move lower, rendering higher bond yields. The net effect of that for people seeking mortgage loans is higher interest rates.
What is interesting to me is that more people are not taking advantage of the current favorable markets to buy homes. Granted, for those hit hardest by the recession, the dream of home ownership may not be immediately attainable. For others, owning a home may not be the right choice under any circumstances. Yet I've no doubt there are millions of people across the nation who would like to own a home of their own and are able to make a move, but remain paralyzed nonetheless.
For first home buyers and others with nothing to sell it's essentially a no brainer. Also, as I've explained previously in this blog, even move-up buyers who have homes to sell stand to gain in today's market by cashing in on high inventories, low interest rates and a pricing roll-back to levels not seen since the early 2000's. What they would lose on the selling side would be more than made up on the buying side, even before factoring the advantages of locking in an historically low mortgage interest rate and the better leveraging return over time on a higher priced home.
Has our myopia reached such a point that we can no longer see past our noses? Does everything in life now have to produce an immediate, incontrovertible gain? Whatever happened to long term thinking and planning? Short-sightedness is largely what brought on the current condition. Now it threatens to prolong the pain. All markets offer both challenge and opportunity. The spoils of success go to those who meet the former head on and embrace the latter.
What is interesting to me is that more people are not taking advantage of the current favorable markets to buy homes. Granted, for those hit hardest by the recession, the dream of home ownership may not be immediately attainable. For others, owning a home may not be the right choice under any circumstances. Yet I've no doubt there are millions of people across the nation who would like to own a home of their own and are able to make a move, but remain paralyzed nonetheless.
For first home buyers and others with nothing to sell it's essentially a no brainer. Also, as I've explained previously in this blog, even move-up buyers who have homes to sell stand to gain in today's market by cashing in on high inventories, low interest rates and a pricing roll-back to levels not seen since the early 2000's. What they would lose on the selling side would be more than made up on the buying side, even before factoring the advantages of locking in an historically low mortgage interest rate and the better leveraging return over time on a higher priced home.
Has our myopia reached such a point that we can no longer see past our noses? Does everything in life now have to produce an immediate, incontrovertible gain? Whatever happened to long term thinking and planning? Short-sightedness is largely what brought on the current condition. Now it threatens to prolong the pain. All markets offer both challenge and opportunity. The spoils of success go to those who meet the former head on and embrace the latter.
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
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