Have you heard what Freddie Mac just announced? The 30-year fixed rate fell to 4.09 percent -- the lowest in six decades.
But many "want-to-be" homeowners aren't in a position to take advantage of that.
Many simply can't become homeowners because lending standards are much stricter today compared to the pre-"housing bust" days. There are other reasons, too -- as EWI's president Robert Prechter pointed out in his recent Elliott Wave Theorist:
"Credit agencies...plumbed the depths of the housing market in the early 2000s, ultimately lending as much as 105% of house values for collateral loans. When the reversal occurred, there was virtually no one left who qualified to buy a house. Creditors never saw the reversal coming, and now they are stuck with bad mortgages. They are too afraid to finance more of them, and even when they do seek new buyers, they can hardly find them because they’ve been used up."
Elliott Wave Theorist, July 2011
And even "more credit-crushing legislation [is] under consideration" notes Prechter. He's referring to a plan from federal regulators that would require home buyers to put 20 percent down. As the Atlanta Journal-Constitution reports (7/25):
"The proposal would split home loans into two categories. One would be loans to buyers who put 20 percent down, and lenders would face few regulatory hurdles bundling those loans to sell as investment securities...
"The other loan category would allow smaller down payments but would require lenders to maintain at least 5 percent of the total value of their loans so they shoulder part of the risk. The intent is to ensure lenders thoroughly vet borrowers."
One U.S. senator says the proposed plan "...will put the final nail in the housing market," because it could shut out lower-income people from the housing market.
As you can see in the fourth graph of the chart below, the number of new homes sold has already "rolled over" after the weak bounce of the past few months and fell below the 2008-2009 levels:
This chart appeared in the August issue of our Financial Forecast. As it shows, other economic indicators -- consumer sentiment, the Baltic Dry Index and U.S. auto sales -- also show a similarly dismal picture.
What does this mean for the U.S. economy, real estate and stock market in the months and years ahead? Are we at a bottom, or are there further declines ahead?
You can get our objective, Elliott wave-based answers now in Prechter's Elliott Wave Theorist and our monthly Elliott Wave Financial Forecast. The best news is that you get the latest issues at a special, limited-time 26% discount.