The Mortgage Man

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Worst Week Followed By Best Day Ever

After the stock market’s worst week in history, it closed yesterday with the highest gain in history.

What a roller coaster ride for investors.  After a record for the largest 1 week decline ever last week, investors came back with a vengence yesterday to close the DOW up 936 points.  That makes yesterday the largest single day point gain in history, and the 5th largest perecntage gain ever.  Activity like this begs the question of whether we have found the bottom in the equity markets or not.

No one will know where the bottom is until we have already passed it, but the level of volatility and panic in the sell offs last week suggest that we are either there now, or at least we are close.  Since this blog focuses primarily on real estate and mortgages, how will this affect housing?

There is no direct connection between the stock market in general and the real estate market.  But, they are all slices of the same economic pie.  The typical bear market lasts 13 months with a resulting decline of 30% to 40% in the stock market.  Right now we are in the middle of the 12th month of market decline from its highs in October 2007, and the total point decline is around 41%.  Based on this information alone (and there are many more factors at play), it would signal that we are at the bottom, or at least close to it.

The bigger problem in the real estate market is inventory vs. willing buyers.  Because foreclosures are still coming on the market in record numbers, we will have to remove some inventory before sellers can really make up any ground.  But, for buyers, this is the best buying opportunity that has existed in decades.  Locally (in North Florida), home prices are back to 2003 levels, and the deals available to buyers are jaw dropping now.  Nationaly, the numbers vary by area, but there are tremendous buying opportunities across the country.

Lending standards have tightened, but there is still mortgage financing available (contrary to the inpression that you might get from the news).  For more information on the financing options available to you, go to www.SteveRussellOnline.com, or call me at 888-257-8383.

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