By Eric Carlson
Hi-Tech/High Touch Real Estate
This time of year the housing market starts winding down as we head toward the holidays and the end of the year. Mid-November was a busy and important period for the housing market. Three different macro-economic events that took place in the United States and overseas could offer some hope for the long-term stability of our own housing market.
These new events included several key political and economic developments including:
News of the euro-zone agreement really put a charge into the stock market, sending the Dow Jones Industrial Average up to 339 points, or 29 percent, moving above the 12,000 level for the first time since early August.
So much of the decision to buy a home, to sell a home and move up to another, or to purchase that vacation home or investment property, has to do with consumer confidence.
President Obama’s plan would relax the qualifications for refinancing a federally guaranteed mortgage. Under the new rules, more homeowners who are underwater or close to it have a chance at refinancing with mortgages hovering around 4 percent.
“This is a big shift in policy in the right direction,” said Ken Rosen, chairman at the Fisher Center for Real Estate and Urban Economics at U.C. Berkeley. Rosen said the program would make it less likely that underwater homeowners will “strategically default,” walking away from their homes and mortgages. With fewer strategic defaults, there potentially would be less “shadow inventory” of distressed properties hanging over the market and pushing down prices.
Meanwhile, news that the U.S. economic growth picked up steam in the third quarter to 2.5 percent appears to be easing concerns of a double-dip recession.
Finally, the euro-zone agreement appears to have averted, at least for now, a financial crisis that threatened to spread from Greece to some of the larger players in Europe, including Italy. The sovereign debt crisis has been a dark cloud hanging over the U.S. financial markets and impacting all of our 401ks and other investments.
None of this is to say that we’re out of the woods yet. Our economy and housing market still face significant headwinds, including a weak jobs market and a slow recovery still trying to gain traction.
The events of mid-November are, at least, more encouraging signs that things could be improving and give us all reason to be a bit more confident and thankful.