Home Loans – Looking More Closely at the Market

Aug 12th, 2007 @ 8:32 AM by Alden Smith

When asked to contribute to the Loan.c blog, I felt that my biggest contribution could be in reporting the news on mortgages and loans. Not being an expert in the field like Morgan Brown or Russ Martin, I felt this would be the best way for me to contribute. Morgan, Russ and our editor Lauren Blair agreed. I thought it would be a cakewalk. My forte is research, and I follow the news closely. Writing as I have for so many years made me feel I was in a position to cover this nicely.

Doom and Gloom in the Market

Because the focus of this blog should be to bring pertinent information and solid research to the consumer, I have found that the news has been less than optimistic as of late. Certainly, the headlines are screaming about the troubles in the mortgage market. The slightest wobble in the market sends investors running for the trees, and panic is the word of the day. Is everything as bad as it seems? I think not.

Good News From the NAR

The National Association of Realtors, the entity that oversees realtors in the United States, is a good “go to” place for information on the climate of the market. I check their site regularly in the course of research. They keep track of many things, such as the Pending Home Sales Index. Quoting from the NAR website: “The index measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos and co-ops. A signed contract is not counted as a sale until the transaction closes. Modeling for the PHSI looks at the monthly relationship between existing-home sale contracts and transaction closings over the last four years.”

Indications are taken from the month of June. Based on residential home contracts signed in June, the PHSI was 102.4, 5 percent higher than the downwardly revised May index of 97.5. The index was still lagging behind the 112.0 pace in June, 2006 by 8.6 percent. The increase over May’s reporting was the biggest jump in more than three years.

What does this tell us?

There is still confidence in the market. Families need housing, and will get it one way or another. I see the news skewed towards doom and gloom, and ask myself why that is so. I think that from reviewing the reports listed here, we are only seeing what sub-prime and poor investments are dealing with. It doesn’t cover the entire market, but that has not been the case in reporting the news. Surely, the market is in trouble. But let’s put a little focus on the good things happening instead of all the bad. We will be better off…