Housing Market – Stock Market Linkage Economic observers — and readers of this blog — know the dynamic well. Namely, melting stocks precipitate a flight to safety (bonds), which drives down interest rates . . . helping home sales (at least in the short run). In fact, just such a sequence played out this week,...Read More
Addicted to (Spoiled By?) Ultra-Low Interest Rates Two years ago, when the shortage of housing inventory in the Twin Cities first became apparent, the leading theory was that underwater homeowners literally couldn’t afford to sell.* Now that local housing prices have rebounded significantly, that theory . . . umm, holds less water. With current Twin Cities housing inventory the...Read More
Muted Effect (So Far) If the U.S. government defaults in 10 days and interest rates suddenly go kablooey(!) . . . all bets are off. But in the meantime, the effect of the federal government shut-down on the housing market appears to be muted. According to the lenders I work with most often, the main...Read More
The Timing Factor More than people would like to admit, there’s an element of luck involved in real estate. The variables include: •Whether your buying and/or selling coincides with housing market peaks or troughs (if you’re doing both, it matters much less). •What prevailing interest rates are — and what they’re doing just before you...Read More
Pop quiz: the consensus among mortgage lenders is that Hurricane Sandy will have the following effect on mortgage rates: A. Up. B. Down. C. No change. Answer: C. That opinion seems to be based on two factors: 1) Hurricane Katrina’s negligible effect on interest rates in 2005; 2) the Fed’s commitment to keep rates low...Read More
The Microsoft Precedent What turned Microsoft from the preeminent company of the early Internet era (circa 1999) to a company that is now eclipsed by such juggernauts as Google, Apple, and even Amazon.com? One theory is that its focus on “legacy” products — operating systems and applications software — caused it to miss such innovations as Internet search, smart phones,...Read More
