The Housing Market
Check out the following commentary by Economics Finance blog contributor Tyler Stoffers
All-time low mortgage rates have slightly helped to stabilize the current housing market which is facing huge numbers in foreclosures and unemployment. In September, purchases have increased 10 % to a 4.53 million annual rate. This can be partly contributed to the lowest mortgage rates on record as well as the current low price of homes. Senior economist at RBC Capital Markets Corp. Tom Porcelli states that “Even with this improvement, you’re still at a remarkably depressed level” and “We’re going to continue to muddle along here, given the supply-demand imbalance”. As a result of this growth in home sales, stock and treasury experienced gains. The S&P 500 increased 1% and the 10-year Treasury note fell to 2.5%. However, government investigations of faulty paperwork on mortgages are threatening to delay the recovering housing market. Foreclosures are growing as high levels of unemployment persist and declining home values are causing high amounts of defaults. Additionally, uncertainty of the housing market persists due to unknown decisions of the Fed. Unemployment is forecasted to exceed 9% through 2010 which could prevent the recovery of the housing market, despite record lows on a 30-year mortgage.
What do you think the fed should decide to do, in order to stabilize the housing market?