The inverted yield curve points to a recession in 2007. There is considerable concern by economic forecasters that this will lower housing prices, which in turn will persuade home owners to spend less, causing a worse recession.
In 2006, there has been a decline in the median house price, the first time this has happened in 13 years. The decline was slight: 1.2%. The price is still $225,000.
Some areas have suffered larger losses: in the range of 10%. Other areas have experienced considerable increases: in the range of 15%.
There is a digital map that lets you click your state to find out how a few cities in your state have done. This is nothing like a comprehensive list of cities, but it gives an indication of the direction prices are heading in a state.
Mortgage rates are falling, along with bond rates. Normally, this would benefit home owners: more eligible buyers to bid up prices. The question is: Will a recession overcome the upward pressure on home prices that lower rates would normally produce? I think it will.
I also think mortgage rates will fall further. At some point, it will pay you to re-finance. Don't increase your total debt, however. Don't consume your equity. Just pay off the existing mortgage.
Shop for the lowest rate available. Yahoo has a convenient page that lets you see what mortgage rates are in your area. They vary considerably.
I used this service to buy a home in 2005. It saved me a total of $17,000 over what I had been quoted locally.
P.S. For a very funny cartoon video at Marxism's expense, watch this:
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