Tuesday, January 30, 2007

Economic News

Some pretty good news for housing, as New Home Sales came in better than expectations, while Existing Home Sales were slightly less than expected, both enjoyed improved inventory. 2006 represented the third best existing home sale market on record. Of course, the media is already putting a doom and gloom spin on the story, making a stink about the drop from 2005 to 2006, and the fact that sales haven't fallen off this much year over year since the early 1980's. Some important considerations: first, 2006 is coming off a record year in 2005, so to see a drop off in record levels is not unexpected. Second, the media is comparing the drop in year over year sales to the early 80's, but in 1982 the national unemployment rate was 9.7%, more than double the current unemployment rate. Many experts believe that we will look back at August 2006 as the bottom of the housing market. I guess it depends on who you are as to whether or not this is good news.

One more quick note on this subject. We've had better than expected economic news over the past couple of weeks. This is causing home loan rates to increase. If you are considering buying, you might want to get on your horse! Just a 1 point increase in rates could raise your housing costs by 20%!

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