Approaching real estate and mortgage lending with optimism.
If you are trying to make sense of the condition in the real estate and mortgage industries these days, don’t bother referring back to your old Economics 101 textbook where you first read about the laws of supply and demand. You’ll remember the side of the equation that says when the price of a product goes down, the demand for that product goes up.
Now, let’s apply our economics refresher course to the current housing and lending markets. According to The Wall Street Journal, the median U.S. home price was $201,000 in January of this year, down 4.6 percent from January 2007. The S&P/Case-Shiller National Home Price Index for the fourth quarter was down 8.9 percent from a year earlier, the biggest drop in 20 years. Furthermore, there was a 10-month supply of existing homes for sale in January, up from just under five months during boom times. The supply is up so prices are down.