- Miller Samuel Real Estate Appraisers & Consultants - http://www.millersamuel.com -
Get Down With It: Falling Mortgage Rates Are Not Creating Housing Sales
Posted By Jonathan Miller On November 27, 2012 @ 11:16 am In Mortgage | 5 Comments
Inspired by my analysis of yesterday’s WSJ article , I thought I’d explore the effectiveness of low mortgage rates in getting the housing market going. I matched year-to-date sales volume where a mortgage was used and mortgage rates broken out by conforming and jumbo mortgage volume.
Mortgage volume has been falling (off an artificial high I might add) since 2005, while rates have continued to fall to new record lows, yet transaction volume has not recovered. I contend that low rates can now do no more to help housing than they already have.
Even the NAR has run out of reasons and is now focusing  on bad appraisals  as holding the market back  (I agree appraisal quality post Dodd-Frank is terrible and is impacting the market to a limited extent – and I secretly wish appraiser held that much sway over the market).
I’m no bear, but the uptick Case Shiller’s report today  (remembering that Case Shiller reflects the housing market 5-7 months ago) still shows slowing momentum  and all 2012 year-over-year comparisons in the various national reports are skewed higher from an anemic 2011.
Five years of falling mortgage rates have only served to provide stability in volume. The monetary and fiscal conversation ought to be on ways to incentivize banks to ease credit – falling rates only makes them more risk averse.
Of course a significant drop in unemployment would likely solve the tight credit problem fairly quickly.
Article printed from Miller Samuel Real Estate Appraisers & Consultants: http://www.millersamuel.com
URL to article: http://www.millersamuel.com/blog/get-down-with-it-falling-mortgage-rates-are-not-creating-housing-sales/27312
URLs in this post:
 Image: http://www.millersamuel.com/charts/us-jumboconforming-mortgage-rates-versus-number-of-sales-wmortgages-123q-ytd-2005-2012
 my analysis of yesterday’s WSJ article: http://www.millersamuel.com/blog/jumbos-fell-harder-now-rising-faster-but-off-low-base/27285
 focusing: http://realtormag.realtor.org/daily-news/2012/10/16/appraisals-remain-big-hurdle-agents-say
 bad appraisals: http://realtormag.realtor.org/daily-news/2012/11/26/appraisals-reflecting-market-or-hindering-it
 holding the market back: http://voicesofrealestate.blogs.realtor.org/2012/10/15/appraisals/
 Case Shiller’s report today: http://www.marketwatch.com/story/case-shiller-shows-home-prices-rise-again-2012-11-27?link=MW_latest_news
 shows slowing momentum: http://www.dsnews.com/articles/case-shiller-indices-up-in-sept-momentum-slows-2012-11-27
Copyright © 2011 Miller Samuel Appraisals. All rights reserved.