Economic Jitters?
Recently released infrmation about our Charlotte Area housing market:
Home prices increased by 2.3 percent during the fourth quarter of 2007 in the Queen City, while there were only two other areas where this happened and that was Seattle and Portland. The rest of the country is still taking a hard hit on lower home prices, with Miami the hardest hit city, with a year-over-year decline of 17.5 percent. Housing prices in both Las Vegas and Phoenix dropped 15.3 percent.
With lower prices buyers should not hesitate to jump in and buy, wait to long and buyers may have passed the chance to increase their portfolio. Today it takes a little bit more money or better credit score to get to those decent rates, but buyers can pick and choose at leisure.
Coast to coast builders are reducing home prices in order to gain home sales, great for the buyers to jump in now, bad for the builder who shows big net losses compounded by disappearing investors. Analysts are encouraged that some larger builders are able to generate cash to pay down their debt from a year ago. This slump or bubble burst in 2006 and has had a destabilzing effect for over a year and with the sub-prime failure it all started to tumble. Consumers are playing a wait and see and investors obviously are doing the same.
Many are thinking recession, but no one can say for sure if one is on the way or if we are in a recession. Recessions are becoming shorter and shorter with the last two recession lasting only about 8 month in 1990 and 2001. Analysts are saying that there have been no cut back on the work week and demand for product has not been reduced, which are two key ingredients needed for a recession, although presently we do have some factors occuring. Like a tumbeling DOW and falling interest rates in the long terms sector that are surpassing the short term rates.
A "Recession " is a significant decline of economic activity spread across the economy usually visible in gross domestic product, employment, incomes and industrial production. The rule of thumb is two consecutive quarters of shrinking GDP singals a recession.
One of the reasons recessions are not as severe now, is that manufcturers no longer carry long term inventory, thanks to the lean manufacturing plan and better just-in-time supply chain.
So lets hope for a turn around, which usually occurs once the Federal Reserve shifts its priority from battling inflation to supporting growth, and cuts interest rates. The last time refinancing started the success and hopefuly creativity is going to show up again soon in the mortgage banking industry, but with more responsible results.