Over the past few years, economists and housing advocates have predicted a recovery in “x” or “y” year, only to push those estimates back by a year or two after each year passed.
In fact, it wasn’t too long ago that experts were predicting an end to the madness in 2009, 2010, 2011, and so on.
Heck, back in 2007, Fannie Mae’s president saw a possible housing recovery in late 2009.
We’re now rapidly approaching the end of 2011, and as we do, things seem to be getting worse rather than better.
Low Rates Aren’t Helping
Unfortunately, it’s not doing much to salvage housing, primarily because no one has any confidence in housing.
This is evidenced by the lackluster purchase-money mortgage application volume of late.
During the latest week, the Mortgage Bankers Association noted that applications to purchase a home increased seven percent on a seasonally adjusted basis.
But they were off 7.2 percent compared to a year earlier, which makes you wonder where the recovery is.
Even with mortgage rates nearly a half-point lower than they were last year, nobody seems to be biting.
Forget about whether these people are actually approved – they aren’t even applying.
“It Has Never Been a Better Time to Buy”
Meanwhile, real estate agents are proclaiming that, “it has never been a better time to buy than right now.”
And hey, it’s hard to disagree with them, what with mortgage rates really, really low, and home prices well below levels seen a few years ago.
So what gives? Why isn’t anyone taking advantage of this once in a life opportunity?
For the first-time homebuyers, perhaps it’s a widespread lack of confidence, coupled with the fact that without steady employment, it doesn’t make sense to buy a house.
Then there are all those disillusioned renters who have probably been turned off to housing after watching the carnage over the past five or so years.
For those who already own a home, it’s a home equity issue – they can’t dump the current property and move on, as much as they want/need to.
For investors, it’s more of a buy-and-hold environment, which makes it less attractive. And they’re also buying in cash it seems.
Regardless, there doesn’t seem to be a recovery in sight for the foreseeable future.
If anything, it only appears as if there is more bad news on the horizon. That translates to a wait-and-see mentality, despite all the favorable data working in prospective homebuyers’ favor.
And explains why refinance applications accounted for more than 77 percent of total mortgage volume this past week.