Halstead Property

Diane M. Ramirez
President
dramirez@halstead.com
(212) 381-3203

Bulls Bears Housing Omen

This week's Bulls & Bears: Gary B. Smith, Exemplar Capital managing partner; Tobin Smith, ChangeWave Research editor; Pat Dorsey, Morningstar.com director of stock research; Scott Bleier, HybridInvestors.com president; Leigh Gallagher, SmartMoney senior editor, and Diane Ramirez, Halstead Property president.

http://media.halstead.com/movies/Diane_Ramirez_Bulls_and_Bears.wmv

Are higher mortgage rates a bad omen for the housing market? Low interest rates have been a big reason why the housing market has been so hot. But now rates are on the rise and are at four-year highs. In fact, the 30-year mortgage just hit 6.66 percent! That's right 6-6-6! Is this a bad omen for the housing market?

Diane: This is absolutely not a bad omen for the housing market. No one likes interest rates to go up, but we're still at historic lows. This is not a bad omen. When you look at the economy in general, job rates are good. Americans love home ownership and the tax advantage it brings along.
 

Tobin: Housing boom died last March. It just depends on where you live. We are back to a normal housing market except in the areas where the greatest excess is. Real estate is local. In many parts of the United States it is very difficult to sell your house, but the good news is that in most areas we are not having a crash.

Scott: The wild frenzy in housing is certainly over, but housing's desirability as an investment is certainly not over. It is the largest tax deduction that an individual can take. Interest rates may be at a 4-year high, but they are significantly less than the average rate over the last 30 years, which is over 7 percent. It is now a buyer's market instead of a seller's market, so it is tougher to sell a house. This makes it a great time to buy!

Gary B: I don't see a big collapse. Housing is only leveling off. We have returned to its long-term upward trendline. The bubble has not burst yet and we are heading back up at a nice pace.

Pat: I agree with Toby that it all depends on where you live. In some areas it has not changed very much, but in others you are just out of luck.

Leigh: Yes, this is a bad omen for housing, but just a continuation of what's been going on for months. Things aren't going to plummet from here. This is merely the next step or signal in a housing market that's been cooling off for a while. It will continue to level off, especially in some of the hotter markets and for second homes.

Saturday, June 10, 2006