Real Estate Outlook: Predicting the Stock Market's Eff ect on Housing

Elaine Quigley CRS, GRI Elaine Quigley Real Estate WWW.EQRE.COM With the unprecedented shocks on Wall Street and the financial sector still pulsing through the national economy, it's difficul t t o predic t just how all this will ultimately affect real estate.

But so far at least, Wall Street's troubles aren't creating immediate problems for homebuyers, sellers and real estate professionals. In fact, conditions actually appear to be improving.

Take the mortgage market: rates continued to drop last week and applications for new mortgages were up sharply - by 33 percent. Thirty-year fixed rate loans dropped to 5.8 percent in the latest survey by the Mortgage Bankers Association, and hit 5.4 percent for 15-year loans.

Rates are now just half a point above the 40-year lows they hit in 2003 and 2004.

Of course there's a flip side here: money may be cheap, but qualifying for it has gotten tougher in the last six months. Many lenders now want to see higher credit scores and bigger down payments from homebuyers - and application turndowns are on the rise.

But consumers don't seem to be over-reacting to all the confusing news: the latest national consumer senti- ment poll by the University of Michigan registered a surprising 10-point jump in early September - that was the biggest increase since January of 2004.

The same survey found that consumers' expectations of where we're headed in the economy - a key index that has a direct connection with people's willingness to consider buying houses - rose by 13.1 points, the biggest since 1991.

And here's another surprise: even homebuilders - who have taken some of the hardest hits in real estate in recent years - see things looking up! After years of declines, the National Association of Home Builders/ Wells Fargo builder confidence index took a positive turn in the latest month.

The association said that half of all U.S. builders now see their local markets as having bottomed out and primed for improvement.

That may sound like wishful thinking, but it's a change in perception that we shouldn't

" ignore. New home building starts haven't been aff ected by those rays of optimism, however; they were down by 6.2 percent in September, according to the Commerce Department.

But then again, that's okay too, because with a 10-month glut of new houses sitting unsold nationally, we don't need a big burst in new starts until the unsold inventory gets burned off .

So all in all, given the earthquakes underway in the fi- nancial system, things look surprisingly positive.

Wondering what your home is worth in today's market? Call Elaine Quigley at 508-366-3766 for all your real estate needs. Don't miss this terrific opportunity to become a homeowner or move up and buy the home of your dreams. Visit our website at www.EQRE.com.

Excerpted from an article by Kenneth R. Harney