Quick Note on the Economy

The economy is looking up according to the gauge of consumer sentiment and that could be good for sales and signal the end of low mortgage rates. So now may be the best time to purchase a home. Not very often do you see the combination of low home prices and low mortgage rates at the same time in the economy.

The willingness to ”pull the trigger” on a home purchase has more to do with how a home buyer feels about their own financial stability and their view of the economy than any other factor. It also has a lot to do with low rates. So there will be a delicate balance for a while that mortgage rates not go up to fast and kill the fragile housing market. If the economy were to see the housing market tank it could very well bring the overall economy down with it.

So, it is good news for the housing industry to see the Thomson Reuters/University of Michigan’s Consumer Sentiment Index continuing to climb upward from our lows of last summer. We will need to see this gauge stay at a high level for sustained period before we cna say we are “out of the woods”. The looming healthcare verdict will either boost it if ruled unconstituional or will slam it if allowed. The economy just can’t ever recover if the governmnet takes over more than twenty percent of the gross domestic product of the nation.

The reading of 75.3 was a slight improvement from the prior month and the highest reading in a year.  It also continues the trend of improving consumer sentiment since our lowest readings in August 2011.

A third of consumers spontaneously reported hearing about more job opportunities, the highest proportion ever recorded by the survey. The U.S. jobless rate unexpectedly fell to a three-year low in January, stoking hopes the labor market is healing. Though we need to look into what type of jobs are available. Housing cannot continue to improve with McDonalds creating the majority of America’s jobs.

Combine the above with all time low interest rates, and improving home affordability, and we’ll see markets with balanced inventory demand improving for both new home sales and existing home sales.

 

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