contrarian idea: mortgage ‘rebound’?

[socalarm]

does the soft landing idea still have traction?

http://www.usatoday.com/money/perfi/housing/2006-08-09-mortgage-apps_x.htm

“Mortgage applications rose for the first time in four weeks as long-term home loan interest rates plunged to their lowest levels since March, data from the industry’s main trade group showed Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended Aug. 4 rose 4.9% to 553.3, from the previous week’s 527.6.

Borrowing costs on 30-year fixed-rate mortgages last week averaged 6.45%, down from 6.62%…”

[(former)FormerSanDiegan]

Independent of soft and hard-landings for RE prices … when mortgage rates go down applications go up, and vice versa.

Rates certainlky are a factor, but a sustained drop or settling of rates would ease the hardness of the landing, but would not fundamentally alter the fact that home ownership to income and rental rates is out of whack.

[LA_Renter]

There will be monthly fluctuations but I believe if you look at YOY comparisons they are down 25% to 30%.

[IONEGARM]

Weekly variations fluctuate wildy, graph out the Purchase Index last two years, and put in a four week moving average. Smooths things out and gives a much better picture. You’ll notice the 4 week avg matches the Purchase Index for this week almost exactly. Pretty steady downward trend.

[VCJIM]

Also, the general sentiment has not changed about real estate. *Most* people still think it’s a good investment. If they can get a loan, they will buy. I recently heard from a friend who bought a house in Phoenix in 2004, a house in the San Fernando Valley, and land in Southern Arizona. She is trying to sell both houses without much luck and is having difficulty making the payments. Hmmm…

[(former)FormerSanDiegan]

I strongly disagree with the statement “…the general sentiment has not changed about real estate. *Most* people still think it’s a good investment.”

Where are these investor-buyers ?

What are the headline stories in U-T, LA Times, etc regarding real estate ?

My friends, I believe that Main Street sentiment has clearly and obviously changed

[PD]

I would not say that it has changed, rather that it is changing. There are still plenting of people who think RE only goes up. However, their numbers are shrinking.

[VCJIM]

Perhaps you’re right; maybe we’re at a strong transition point and I’m looking behind the curve. It wouldn’t be the first time!

[VCJIM]

I have an idea! (this doesn’t happen often, so take notice)

What if everyone (or anyone that wants to) on this board asks ten people they know (average, non real-estate savvy) if they think buying a house right now would be a good investment for the next five years. We could post our responses and tally them. Wouldn’t that be fun?

[PD]

I think I’ll have to ask people on the street. All of my friends and relatives have been hearing me blather on about the bubble for over a year now. Even if they thought prices are going up, I don’t know that they would say that to me!

[VCJIM]

Yeah, ask other parents at your kids soccor match, that kind of thing. The grocery checker, passing acquaintances.

I bet we would find more valuable information about general sentiment than almost any media reporter!

[PD]

We should ask the same question in order to compare results. My suggestion:
Do you think housing prices in your neighborhood are going up, staying the same or going down?

[(former)FormerSanDiegan]

Don’t forget to ask the shoeshine boy and your local X-ray technician.

[VCJIM]

I think that question is too specific for the lay person; most people don’t watch prices like we do. I believe what we’re looking for is general sentiment about housing. In the mid-1990s, the general sentiment that housing was a BAD investment. Right now, I believe it is the opposite. So if we ask, “Do you think over the next xx (5?) years, housing will be a good investment?” It should tell us a lot.

[powayseller]

Ok, I’m “in”. Can we start a new thread though for a tally? Can we also ask about “the next year”?

[Author]

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