Summer is the “hot” selling season, since families like to move while the kids are out of school. Since the kids go back in August, I was expecting to see a bump in sales this July, but it didn’t happen.
116 single family houses sold in July, making it an average month in units sold for the year. The average sale price was $156,000, and the average dollars per square foot figure was $84…a number that we haven’t seen since February 2003. Another bad sign was that inventory has begun to creep up. There are currently 1515 single family houses on the market, which equates to a little over 13 months inventory.
I am writing this on the evening of Monday, August 8. Last Friday saw a 500+ point slide on the Dow Jones Industrials, and that day ended with Standard and Poors downgrading America’s debt rating for the first time in history. The stock market went into another freefall today, ending down 638 points, the 6th worse slide in history.
So is there any good news?
Yes, there is.
Friday’s Wall Street Journal reported (on the same day as the debt downgrade) that the average rate of a 30 year fixed rate mortgage had dropped to 4.39%, and a 15 year mortgage was at 3.54, the lowest since Freddie Mac started keeping records in 1991. Folks, at those rates, it’s practically free money! And it gets even better…
When the debt was downgraded late Friday, the speculation was that interest rates would rise. Instead, the 10 year Treasury bill DROPPED today. Mortgage rates are generally tied to the 10 year T bill. Yes, mortgage rates may dip a bit lower than the already incredibly low rates.
Some perspective. I bought my first house in 1989. I got a conventional 30 year fixed rate loan at 9.875%, and i thought I was stealing the money! That was the first time that mortgage rates had been in single digits in years. Going back a bit further, FHA mortgage rates at the end of the Carter administration were 18%.
I kept my ear glued to CNBC most of the day Friday and today. One of the most commonly asked questions was “Where should I put my money today? Stocks are in the tank, gold has skyrocketed, and the US bond just got downgraded. Where is a safe place for my money?” The answer seems pretty clear to me. Houses are selling at prices we haven’t seen in years, and money to buy them is practically free!
It doesn’t matter if your are looking for a place to live or a place to invest. Houses are a great bargain right now.