Fed Meeting Wednesday Will Bring Market Volitility

Friday showed continued volitility as the stock market drop caused investors to return to the safety of the Bond Market.  This caused a decrease at Friday mid-day in home loan rates. 

News from the former Fed Chair Alan Greenspan had a more positive tone.  While he still thinks the chance of a recession (2 consecutive quarters of negative GDP growth) is 50/50, he said that if the U.S. economy did enter one, it would be short and shallow.  Moreover, Greenspan thinks 2008 could be the bottom in housing!  Now consider this - if the housing market had a large affordability gap perhaps as much as 30% . . .the excess will have been reduced quite a bit by the end of this year.  Prices declined by 5% - 10% in 2007.  Add another 5% drop this year and half the excess in affordability is gone.  Now think about incomes rising a modest 2.5% per year.  Since we qualify potential home owners at a front ratio of 33% or less, the 2.5% increase in income translates to about 7.5% increase in price.  Two years of that wipes out the remaining 15% gap in affordability.  There is still a lot of inventory to soak up, so prices won't rocket higher next year, but we should see stabilization and modest price appreciation. 

The potential for a conforming home loan limit increase is almost a done deal.  It should be realized by the end of next month.  The cap will likely be 125% of the median home price in our area.   As per MLS, the Flagstaff median home price for 2007 was $371,000.00.  So in February if you home mortgage is between 417,999 and $463,750 we will be able to refinance you home mortgage into the conforming guidelines and the savings will be huge. 

Please give me a call as soon as possible so we can position to refinance your home loan and start saving immmediately.  Liz Fontanini at 928-556-0600.