- The Washington Times - Friday, November 26, 2010

Ever since I started writing this column in 1996, I usually have reserved the Friday after Thanksgiving to reflect on what we have to be thankful for with regard to the economy, real estate and interest rates.

I decided to pull up the column published the day after Thanksgiving 2008. It didn’t have a lot of good things to say about the economy. Let’s see how things have changed in two years.

In November 2008, the Dow Jones industrial average was below 8,000. Today, it’s over 11,000. Good news.

In November 2008, jobless claims rose to 542,000. Last week, the number was at 439,000. More good news.

In November 2008, the unemployment rate was just under 7 percent. Today, it’s just under 10 percent. Not-so-good news.

In November 2008, the inflation rate was pegged at 1.07 percent. As of last month, it was recorded at 1.14 percent. Good news.

In November 2008, mortgage rates were about 1 percentage point higher than they are today. This is definitely good news.

With the exception of the unemployment rate, it appears things have gotten better. The problem with statistics is that they don’t measure how a consumer feels. I talk to lots of homeowners and prospective homeowners every day, and my impression is that a lot of folks would say they are worse off today than they were two years ago.

Despite low mortgage rates, the overly strict underwriting guidelines are preventing a lot of well-qualified folks from refinancing. Also, many of those who do qualify have lost value in their home and don’t have the required equity. This is slowing the housing recovery.

Homeowners who had planned to sell their starter home and move up cannot do so because they won’t net enough cash for a down payment - assuming they can find a buyer. So they end up remaining in their existing home. This leads to far fewer buyers in the market, which leads to sluggish sales, which helps contribute to the lagging economy.

Unfortunately, the picture remains not so pretty.

As of this writing, the Fed’s latest plan of “quantitative easing,” which was designed to lower mortgage rates even more to stimulate the economy, hasn’t worked. In fact, mortgage rates have risen by almost half of a percentage point since the plan was announced.

I’m going to make a note to myself to pull this column out in a year and see how its figures compare with those of Thanksgiving 2011. Meanwhile, hang on and hold tight.

Henry Savage is president of PMC Mortgage in Alexandria, Va. Send e-mail to henrysavage@pmcmortgage.com.

Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.


Click to Read More and View Comments

Click to Hide