Fed Holds Rates Steady in October
While most of the mainstream media ran a story titled Record Drop for Home Prices, the good news was the Fed held rates firm. This is especially good news for homeowners with Option ARMs and adjustable home equity loans.
Even in the negative headline story, there was some good news:
One bright spot for the housing sector in the report was a decline in the number of homes on the market, which fell 2.4 percent to 3.75 million in September, giving the market a 7.3 month supply of homes at the current sales pace, which was unchanged from both August and July. But there are still more homes for sale in 2006 than there were last year.
Thomas Stevens, a realtor in Vienna, Va., and the president of the trade group, viewed that number as encouraging.
“The
good news is that fewer new listings are coming online,” Stevens said in a statement. “It appears we have passed a cyclical peak in terms of the number of homes on the market.”
In other good housing news, the disconnect between house prices and wages appears to be closing. Congress is considering raising the minimum wage, the first time in almost 10 years. For higher paying jobs, a Manpower survey released today showed 38% of employers were paying workers more this year than last. There’s also a shortage of workers for certain fields, leading to pay increases and better benefits for qualified prospects.
Meanwhile, when asked whether a shortage of qualified professionals has caused them to pay more for the same professional positions as compared to a year ago, 43 percent of government agencies and 41 percent of employers in services, transportation, utilities and construction sectors said they are.
The war for talent is expected to grow fiercer still as more baby boomers retire.
With low interest rates, high employment, rising wages and strong business profits, there’s not a reason I can think of that housing will come crashing down.