Signs of Recovery

October 13, 2010
In spite of all the focus on the foreclosure issues, the real estate market is showing some positive signs. Applications for mortgages to finance the purchase of a home in the past week rose 9.3% from the previous week. This is a positive sign that potential buyers are recognizing that interest rates are near or at their lowest level in decades.
Perhaps because the overall economy remains weak, the demand for homes is not strong. However, since the inventory of unsold homes is relatively low, the weak demand has not seemed to cause a further erosion in prices, at least in the Inland Empire market area. It will be interesting to note if the median price has remained stable during the month of September. I will be posting those numbers in tomorrow's blog and you will be able to check if my perception of a stabilizing market is correct.
For the time being, low interest rates seem to be having an impact on buying decisions. The average rate for a 30 year fixed rate loan was a 4.25% last week. Can you remember the last time rates were in the 4% range? The chart I have only goes back to 1960. On that chart, the 30 year fixed rate loan dipped to 6.5%. Perhaps one of you can cite the years that 30 rate fixed loans were at 4%.