It is not news to anyone that consumer confidence is unstable, especially in regards to the real estate market. Although many homebuyers are taking advantage of the low home prices and low interest rates, others are shying away from the real estate market all together. The result? A dip in mortgage applications.
Is it surprising to see the mortgage application rate so low, given the record low home prices and interest rates? Maybe not.
With the U.S. global downgrade the stock market has been relatively unstable with many top stocks in both the Dow Jones and S&P 500 suffering. Although the market is not completely indicative of the U.S. economy, many average people believe this to be the truth and therefore freak out when the market starts to ebb.
The last time the market took a huge hit, the entire U.S. economy tanked and the real estate market was definitely suffering. It is likely, though, that the recent stock market fluctuations are not indicative of a second economic dip or a further declining real estate market.
However, consumers (Americans) put so much “stock” in Wall Street; possibly as a result, mortgage applications dipped 2.4% last week with the purchase index falling 5.7%. With Americans feeling that the unemployment rate will not ebb in the near future at the nation’s economy is on the verge of double dip, consumer confidence is nearly nonexistent.
Despite the fluctuations in the stock market and the decline in consumer confidence, there is definitely light at the end of the tunnel. The nation’s shadow inventory is declining and investors are snatching up foreclosure properties and turning them into rental homes right and left. The Obama administration is actively working to reduce the deficit and stimulate job growth throughout the country.
Granted, the recovery is taking longer than expected; however, recovery is occurring slowly but surely. Rest assured, it appears that we are avoiding a double dip and the current home prices and interest rates are ideal conditions for investors seeking to obtain investment properties at unbeatable prices.