My Mortgage Blog

The big news today is that the Fed announced it will cut the quantitative easing support for lower interest by another $10 billion. There was a sell-off of sorts in the stock market. No big surprise: Either you agree that its time to take the training wheels off of our economy, or you don’t. And if the Fed backs off its obvious position at all, easing its tapering program rather than ramping it up, it will appear foolish and uncertain. It cant afford to do that. It's time to play hardball.

So rates are rising, as are stock indices, and investors in currencies in emerging markets are worried, most of them trying to exit the foreign currencies but you know? I suspect well survive. And I suspect that well see more tapering sooner than later.

There are increased worries, as you've noticed I'm sure, about whether the American real estate market is losing its strength. My bias is that such worries take our eyes off the ball.

Here, by way of constructive contrast, are some recent words from Doug Duncan, Fannie Maes chief economist:

The marked improvement in housing market sentiment over the course of 2013 bore out our view going into the year that the housing recovery was on a firm footing. Year-over-year gains in home price expectations and attitudes about the current selling environment were particularly notable. Going into 2014, housing attitudes are recovering from a recent dip that coincided with the heated fiscal discussions between the Administration and Congress late last year. Consumer attitudes about the ease of getting a mortgage today are at their highest level in the surveys three-and-a-half-year history, which should help offset the current higher interest rate environment and support a continued but measured housing recovery as we move through 2014.

I find little to disagree with here. We do indeed seem to be heading into a more stable market with more participation from the long-missing first-time buyer and a great deal of excitement still building.

Such as? Well, here is an example that has my attention.

HUD just announced that the median age of an owner-occupied home in the US was 35 years old in a 2011 survey. Turns out, the median age was 23 in the 1985 survey.

It also turns out that 41% of the owner-occupied homes in the U.S. were built prior to 1969.

Obviously, we need a great deal more new construction. During the real estate recession, it all but died. And its very slow to come back to life, thanks largely to the risk involved in putting building you then have to hold. So the quest is on to discover the home designs and amenities like fuel efficiency hardware that homebuyers truly want. And builders who play their cards right, along with remodelers and a bunch of other folks from a wide variety of fields are likely to find great profit opportunities if they keep their eyes wide open. 

It's exciting and too few people are talking about it.

Oh, and one last thing this time. What did I mean when I suggested that we are taking our eyes off the ball when we fuss over the possibility that our real estate market is losing its strength? Simple. The issue is still debt; paying it off, finding ways of dealing with it, and bringing it down, bit by bit. Whether were talking about debt from student loans or from years of spending, its still today’s biggest issue for many or most Americans. That, by the way, makes lenders very important as always.