Yesterday the news was about the escalating foreclosure rate in Massachusetts.
Today, Boston.com is reporting that home prices in Massachusetts dropped 4% during May.
That might not seem like a lot, but let’s look at this possible scenario: a home that might have fetched $400,000, is likely to get only $384,000.
Many are also accruing little equity or losing what little they may have acquired.
Interest rates on five-year adjustable-rate mortgages have increased more than one-half percentage point this year, to 6.32 percent, according to Freddie Mac, the national mortgage backer.
But the report ended on a peculiar note:
…economists said that as long as the national economy remains strong and job growth continues, the housing decline in Massachusetts would not be severe.
“You’ve seen pretty tremendous home price appreciation so as that cools off you’re going to see some fundamental changes,” said Bob Walters, chief economist for Quicken Loans in Detroit.
But a strong deterrent to a market crash like the one Massachusetts experienced in 1991 is strength in the US and local economies, which generates jobs and income for houses, he said.
I am assuming he did not get the memo: the Federal Reserve is expected to raise interest rates at its meeting on Thursday. This means that the housing payments for many borrowers are going to increase. Now I’ve said many times, I am no economist, but I am pretty sure that this interest rate hike will result in less money to spend and stimulate the economy, and ultimatley, less money for houses.
Related posts:
- South of the Border: Foreclosures in Rhode Island
- Rainy Days and Bad News
- The Road to Foreclosure: Non-traditional Mortgages
- Mass Bankruptcy Filings Rising
- Worcester Foreclosure Rates Way, Way Up
Tags: Economy