The One Missing Ingredient To Economic Recovery

Unbelievably, mortgage interest rates continue to trickle lower in recent weeks. Stability concerns in Europe, notably Spain, Greece, Italy and Portugal, continue to cause investors to invest in “safer” U.S. backed securities. So why aren’t for people flooding the housing and mortgage market to buy a home and lock in their housing payment for the next 30 years?

Missing Ingredient To Economic Recovery
Economic weakness in the United States is still prominent as the employment picture is not improving. Worse, the jobs that are available are going unfillled due to a skills gap in our country. We need more workers to invest in retraining themselves for positions in manufacturing, engineering, healthcare and other technical roles.

With rates lower you might think that a surge in home sales and refinancing would commence? Not going to happen without more jobs being created. Many potential home purchasers still face credit qualification challenges and lack of down payment and liquid savings to get out of the starting block.

Potential Homebuyers Are Scared
Those wanting to refinance are either underwater or have too little equity to qualify. Plus the closing costs on a refinance is a few thousand dollars which takes 3-5 years to payback. If you are concerned about your job you can’t think 3-5 years ahead and have certainty about being in the same home that far into the future.

Wallace S. Gibson, a property management expert with Gibson Management Group, Ltd. in Virginia knows a lot about the mindset of renters. “I agree that first-time homebuyers are DELAYING buying their first home BECAUSE they are scared of being STUCK with their UNsold home when they need to leave for health * education * employment.”

Like we said yesterday, today’s generation is Renting Scared and not willing or not able to take advantage of historically low interest rates that would allow them to lock in their housing payment for the next 30 years. Rents inevitably go up as the market changes and the needs of landlords change.