In the midst of all of the economic bad news, and the mad dash to intervene throughout the capital markets, there is at least some hint of good news. The beauty and flexiblity of a market economy rather than a command economy, is that markets tend to adjust themselves. When things get too expensive, people stop buying and the price comes down. Price drops far enough, and people start buying again. Although regulation is certainly necessary to soften short term pain or to cover certain kinds of bad behaviours within a market, in general terms, markets will always tend to move to correct themselves.
As 2008 comes to an end, we are starting to see corrections in the Home Loan Mortgage Lending market. Over the last weeks of November Fed actions to bring interest rates down as low as 5.5% on 30 year home loans combined with a 15 to 20 percent drop in the average cost of housing have worked to bring affordablity of housing way up. Read more about it here at FoxNews.
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Rates did come down, but most people either don’t qualify for them, or are too spooked by everyday’s news to consider buying. However, it is a good news for those who are able to refinance their existing mortgages.