Current State of Real Estate Market

September 24, 2009
Matt Isleib

 

The question here is do we really know? In March of this year both real estate and the equity markets began to move up. Housing has inched a percent here and there every month. The equities market has ascended like it was the pre dot com era.

So finally sales of existing home sales retreated. It fell 2.4 percent as reported and released today by the National Association of Realtors. It is the first decline in housing sales since March. All of this a day after the Fed gave an upbeat forecast of the state of the economy and that it intended to slow down their intervention into buying treasury debt and mortgage backed securities. The Fed has aggressively been buying both in a 1.25 trillion pledge to help keep mortgage rates low.

Where does that leave us? Well we now know what the economy looks like when the Fed is the backstop for banks, the auto industry, low mortgage rates and induced home buying due to the 8,000 home buyer tax credits. What will the economy look like once the Fed is not there propping us all up? That is the scary part.

Home sales have increased mainly in part due to the home buyer tax credit and low mortgage rates. Take the credit away which it expires as of now in November and if the Fed is scaling back on keeping its finger pressed to push mortgage rates lower has the housing market really been slowly recovering?

Does the Fed see something that no one else can? The job report that was out today was less than expected. But by no stretch of the imagination was it a sign that the employment arena is showing signs of life. Could the Fed really not have that much of a clue? I have pointed out my facts what do you think? Submit your comments.