January 26, 2006

MORTGAGES MOSTLY STEADY. Mortgage rates have come off their three-month low, according to the Freddie Mac weekly survey. "The miniscule rise in mortgage rates this week most likely reflects market expectations that the Federal Reserve will once again raise rates next week," said Frank Nothaft, Freddie Mac chief economist.

Comforting those fearful of the real estate bubble bursting, Nothaft added that last week mortgage applications for home purchases were stronger than last December's average. This suggests there is some life in this real estate market.

Also making a soft landing call, David Lereah, the National Assn. of Realtors' chief economist, pointed to the 5.7 percent drop in existing home sales in December. Turning bad news into good, he said home sales activity is now at a "sustainable level and is likely to pick up a bit in the months ahead."

But clearly, this is now a buyer's market, no matter how strong the spring buying spree is. The only questions are how fast and how far will sales prices decline. In DC, rising rental rates may help soften the blow, as well as favorable interest rates.

The Jan. 26 survey said the 30-year fixed-rate mortgage averaged 6.12 percent with an average 0.5 point up from last week's average of 6.10 percent. Last year at this time, the 30-year FRM averaged 5.66 percent. The average for the 15-year FRM this week is 5.70 percent, with an average 0.5 point, up from last week’s average of 5.67 percent. A year ago, the 15-year FRM averaged 5.14 percent.

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DC, Maryland and Virginia homeowners who are feeling the pinch of dropping prices are in good company. Redskins owner Dan Snyder dropped the price on his seven-bedroom starter mansion in Bethesda's Longwood neighborhood from $5.295M to $4.25M. Don't cry crocodile tears yet, he paid only $1.9M in 1995. ... Local girl makes good. Clothing store on 14th St, Pop, is opening a second home in Brooklyn. Big sale on now, says DCist.

4 comments:

Anonymous said...

Pop is opening a second location in Brooklyn, not closing up and moving.

Anonymous said...

Yes--you scared me with that "store closing" bit. But the big sale thing is true--I just read about it on the DCist.

dcbubble said...

oops. got it now. thanks

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