Economy in Trouble: Bad for Stocks, Good for Housing
24 January 2008 by Aaron Dickinson - Edina Realty
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As the news about a slowing economy and fears of recession mount, the stock market has taken a huge hit, falling double-digit percentages in the last couple months, but housing is benefitting.
As money has been taken out of stocks, it has been flowing into bonds, which are historically a very safe investment. When demand for bonds rises, that reduces the interest rate paid on those bonds. As the bond market goes, the mortgage market follows.
We’ve seen substantial improvements in rates in just the last week, testing new multiyear lows and closing in on all-time lows! With falling sales prices and lower mortgage costs, housing affordability is climbing quite quickly and if the mortgage rates stay at these levels into February, we’re going to see the best affordability on homes in the Twin Cities since 2004.
One Response to “Economy in Trouble: Bad for Stocks, Good for Housing”
January 31st, 2008 at 10:12 pm
Some say just invest in gold and call it a day. I’m still in favor of real estate. What a great time to buy in the Twin Cities! ~ Jeanie