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Daily Real Estate News | July 6, 2007
Economists at Odds Over Housing Market
Housing is the swing factor between economists who expect economic growth at a sturdy 3.4 percent annual rate and those who believe growth will be only 2 percent.
The half-point climb in fixed mortgage rates from 6.1 percent in early May to 6.6 percent at the end of June, based on data from the Mortgage Bankers Association, could reduce demand for housing, some economists say.
It certainly raises the monthly cost of the maximum conforming loan of $417,000 from $2,527 to $2,663. While that’s not much for a prime borrower, it is enough to mean that some borrowers won’t qualify, economists point out.
But overall that news doesn’t see too bad. Analysts at JPMorgan Chase point out that the unemployment rate is lower now than it was two years ago. The jobless rate in Florida, a poster child for the housing bust, has fallen even more than the national average. The implication: Unless the housing bust reaches the labor markets, consumers and the rest of the economy will likely keep chugging along, J.P. Morgan says.
Source: Business Week, James C. Cooper (07/09/2007)
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