Was May’s Home Sales Report Good News?
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Danielle DiMartino of the the Dallas Morning News asked that question in a very good editorial this morning. The increase in housing sales was not an organic event but instead due to the incentives that new homesellers are showering on potential buyers as they look for new homes in the region.
I have clipped an excerpt of the article but take the time to read the whole of it. The whole article is a very well thought out piece.
Another way to look at how brisk activity remains is through the prism of mortgage equity withdrawal, or MEW, which captures proceeds from cash-out refinancing activity, home equity borrowing, and proceeds resulting from sales. After peaking above a $1 trillion annualized rate in the second and third quarters of last year, it dropped back to a $903 billion rate in the fourth quarter.
But then MEW made an unexpected turn, picking back up to $930 billion. An important detail is that all of the increase fell under the category of turnover or, as Goldman Sachs calls it, “inactive MEW.” Refinancing and home equity borrowing, or “active MEW,” declined as opportunities dried up and home price gains slowed.Goldman predicts active MEW will plummet over the next two years, as home price inflation slows sharply. This will result in a negative multiplier effect on home price gains – a vicious payback for refinancing activity goosing prices in recent years.
Still, the overall rise in first-quarter MEW is indicative of the speculative fervor that has characterized this real estate cycle as no other. It’s no wonder the Federal Reserve is adamant about not pulling back on interest rate hikes.
Read the rest at the Dallas Morning News
Am I the only one that finds it odd that the ONLY place that looks to be seriously warming is ...
It seems there are numbers posted about how much it could cost the US in home sales from people holding ...
The only people holding off will be those that are financially secure and can manage to hold off. How ...
What an awesome way to generate traffic for a story. Were they trying to time that for Sweeps Week? ...
That's awful. I wonder if using that tactic , if a building can be sold or used as collateral. ...
Good point about people possibly holding off now. The 4.5 percent interest rate could be a self-fulfilling prophecy. 
wow this is a wonderful creation...............i would like to be there once even in my life time........... 
Absolutely agree with Jon, excellent site and very imformative. Keep reporting to us please! 
I will say that had I never been to that site and seen Dean's many deals that he documented and ...
Great Real Estate
post ... very interesting. 
