Mortgage rates remain remarkably stable with the thirty-year fixed rate hanging right around 5% with no points and as low as 4.75% with a point. This, despite a four day rally in the equity markets and a $34 billion Treasury bond auction last week both of which tend to drive interest rates higher. The rally on Wall Street has been lead by financial stocks after Citi released an upbeat assessment of its 2009 profit outlook leading many investors to believe that we may be seeing the beginning of some long-missing confidence in the financial markets. Another glimmer of hope was last Thursday’s retail sales figures which showed while sales slowed in February, they slowed much less than analysts had expected. In an extremely rare pre-Fed meeting interview aired on 60 Minutes Sunday, Fed Chairman Ben Bernanke said he sees the recession ending late this year with economic growth beginning in 2010. He credited Fed actions for helping drive down mortgage rates and expanding business lending but acknowledged that the financial system is still on shaky ground and its overall health and recovery are pivotal to an economic rebound. Meanwhile, job losses and foreclosures continue to pile up. Foreclosures for February jumped unexpectedly to 74,000 from 67,000 January.
On a more optimistic note, I am seeing increasing signs of something I have been saying all along…we ( resort markets) were the first ones in this mess and we’ll be the first ones out. While many of the national statistics still paint a rather gloomy picture for the real estate market, I firmly believe we have seen the bottom here locally. Though my evidence is mostly anecdotal, I have been doing this long enough now (sixteen years) to know the tell-tale signs of a market recovery. First of all, my phone is ringing off the hook with inquiries about all kinds of loans. For a while there it was strictly investor inquiries. Now the calls are coming in for investor loans, second-home, primary residences, refinances…you name it. Also, and this is critical, I am getting lots of first-time buyer calls. This is the most encouraging sign because it shows that there is a shifting psyche amongst the general public. The perception is becoming that now is the time to buy. For the past three recessions I have witnessed, economic recovery and, indeed, housing recovery have been preceded by a surge in first-time home buyer applications. I have no reason to think this time will be any different.
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