The National Association of Realtors released it’s Sales of Existing Homes  report, showing that median home prices had dropped 8% nationwide. The Northeast (surprise!) was hardest hit with an estimated 10% drop in sales since August.

Lawrence Yun, NAR’s senior economist, said the numbers are understandable. "Mortgage problems were peaking back in August when many of the September closings were being negotiated, and that slowed sales notably in higher priced areas that rely more on jumbo loans," he said. "The good news is that mortgage availability has markedly improved in recent weeks with interest rates on jumbo loans falling, and more people are applying for safer and conforming FHA mortgage products. Some of the canceled transactions will move forward as buyers apply for other loans."  From : MortgageNewsDaily

This tells me that we’re not out of the woods for quite a while, but people are starting to see that and where possible, move into safe fixed-rate loans instead of the near-ticking-timebombs they were in.

Not Out of the Woods

While this is good news, there are still other warnings about an upcoming surge of mortgages that will be adjusting in the March-April timeframe. Those mortgages could cause waves for an already rocky mortgage sea. Various analysts, City Mayors, and real estate professionals are talking about asking Congress to ‘do something’. The problem is; everyone has a different idea about what that something is.

More regulations on lenders has been suggested. I don’t know how that’s going to solve things NOW, but it might be good for the future. Loan companies are trying to move many people into lower-interest loans to forestall foreclosure proceedings, (some money is better than no money) but this means lower revenue for the companies. This can cause shareholder revolts and massive layoffs like we’ve already seen, which feed back into the loop as the people laid off undoubtedly have mortgages of their own that might risk foreclosure.

Worse Before it gets Better

With on-going home price decreases, many buyers are staying out of the market, waiting for it to ‘bottom out’ before jumping in. This just causes the inventory of existing homes to increase, and depresses home prices even more. I don’t recommend jumping in necessarily, since I do think prices are going to continue downward, but if you do find that ‘perfect house’, now isn’t the worst time to make an offer.

The U.S. Economy is still strong, and as bad as it is, it’s not nearly as bad as things have been in the (distant) past. Even with people starting to banter around the R word (Recession), unemployment is stable-lower, consumer confidence, while not at its’ highest, is still pretty high, and Wall Street is still up for the year. Things could definitely be worse.

We’ll eventually come out of this like we’ve come out of financial difficulties before. Weathering the storm is just going to take a while longer than we’d hoped.