My Mortgage Blog

One of the fascinating things about today's real estate market is how much attention were paying to questions like, well, what do American CONSUMERS think the state of the real estate market is? That, as opposed to what the state of the real estate market really IS, which seems a matter of less and less concern.

Country Financial of Bloomington, Illinois real estate consultancy recently supplied some wood for the intellectual fire by publishing a survey that said 48% of Americans think the real estate market could reach bubble status within the next two years.

This kind of indeterminate guessing is somewhat without merit in my view, as is the fact that about 25% of Americans report that the condition of the real estate market is one of their top three economic concerns.

Remember that economists who crunch real estate numbers that are actually relevant report that residential real estate prices climbed by 12.4% over the past year.

The S&P Case-Shiller Index, meanwhile, fortified this optimism by showing that home prices in major metropolitan areas climbed by a record 12.8% in its August computation.

All of this is impressive, but it seems to me to be old news at this point. Far more relevant, perhaps, is that fact that real estate sales prices and volumes seem in some studies and surveys to be declining of late. For example, the National Association of Realtors (NAR) Pending Home Sales Index (PHSI) for September indicates home sales will stumble in the years final quarter as buyers struggle with declining home affordability.

Pardon me as buyers struggle with... what? Well, with interest rates that rose by nearly a percent over the past 12 months, though that took them to a historically awesome 4.12% recently.

At the same time, investors according to some are pulling out of the single-family residence market, having spent over a trillion dollars there in the past year. Or are they? RealtTrac(r) very recently reported that nearly half of the residential real estate sales in September were still all-cash transactions, and institutional investors were reported to be involved in about 14% of September’s sales. This after many real estate economists reported that investors were leaving real estate investing behind and the market was beginning to resemble what we might call a normal recovery at last.

Part of our problem here is that, with uncertain data provided while the government faced a partial shutdown, we haven't really known whom to believe about what. But I am very reluctant to pay a lot of attention to surveys of what people like my next door neighbor think. This is a guy whose house has been on the market for six months. And guess what HE thinks.

For what it’s worth, I think this is a stunningly difficult market to assess and it’s even harder to make predictions about what well be looking at in a few weeks and months.

Thank goodness rates remain attractive and there are refis still to process. And who knows, maybe there’s a tasty egg nog and incisive conversation waiting for us when the day is done. There is still much to be grateful about, but very little of it is winding up in the newspapers.