The Balancing Act

Rising home values are more important because the value of houses far exceeds the value of stocks held by individuals. Even so, the homeownership rate hovers near a five-decade low and well below its pre-crisis peak. This explains why the so-called wealth effect isn’t having as much of an impact on overall consumer spending and economic growth as it used to.

The peaking consumer confidence in housing recently reported remains in spite of today’s news doused in rumors of rising mortgage rates. In reality, although Americans are richer than ever, they’re not quite feeling that way while, according to The Wall Street Journal, in 2016, “As of the third quarter, American Households had roughly $105 trillion in assets and $15 trillion of debt. And as home values kept rising and stock prices surged following the election, it likely only increased.” Some uncertainties in the economy caused mortgage rates to fall at the beginning of this month and, subsequently, Sean Becketti, Freddie Mac chief economist, was quoted as saying, “With the housing market on the verge of the spring homebuying season, this is good news in an environment where historically low mortgage rates will help offset the pace of house price growth and lack of for-sale inventory in many markets,” as reported by The Washington Post. Presently though, directly following the fall, “Mortgage rates followed the 10-year Treasury yield for the first time in 2017 with a substantial increase from last week,” reports Housingwire.com.

Even with this flux and an air of suspicion that the Federal Reserve is gearing up for a March rate hike, experts are able to find the bright side. With this, Housingwire.com offers an analysis of the latest Mortgage Monitor Report, just released by Black Knight Financial Services, claiming, "The nation's housing market is looking up with an annual increase of 17% in mortgage originations in 2016." In addition, sentiments from the National Association Of Realtors are positive with, "Buyer demand is much stronger than supply at the moment and the economy and job growth are continuing to support the housing market." Thankfully, today's housing market is still being referred to as "a virtuous cycle" by MarketWatch, reiterating that, "Home equity has recovered, mortgage rates remain low enough to be manageable, and high rents make homeownership attractive." In a year already full of surprises, conditions are weighing out as the market steadily finds some balance in the midst of the first quarter act. 

Courtesy of JMJ Financial Group

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Todd Burns - NMLS 254981
JMJ Financial Group
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