Freddie Mac reports that mortgage rates hit another record low of 4.57% on a 30 year fixed home loan last week. That is down from the previous record low hit last week. According to the AP, “many people either don’t qualify for new mortgages or have already taken advantage of the low rates this year.” That means the rates will bring a new wave of homebuyers into the market.
The problems are more complex than that.People still cannot sell their homes without writing checks to their banks. That means in most cases they cannot afford to sell them at all. Eleven million mortgages in the US are underwater, undermining the great American habit of upgrading to a new home.
Real estate costs in many US regions are still falling. People do not want to buy a new home today that will be worth less at the end of they year. Many people are staying renters. Long term rentals leave the costs and headaches of having a house to someone else.
Some argue that low mortgage rates will solve the housing problem. The Fed bought hundreds of millions of dollars in mortgage securities to bring home loan costs down. That does not seemed to have helped at all.
Defaults are still rising. A tiny number of people are willing to risk buying a home in foreclosure, but these homes often need a makeover before they are livable.
Unemployment has kept millions of Americans out of the market worst of all. It has become more and more clear that until there is a recovery in the jobs market, a recovery in the housing market is impossible.
Douglas A. McIntyre
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