The US stock market has begun to shake as Wall Street and individual investors parse through the rapid fire moves of the new White House administration. As stocks have started what’s possibly a longer-term retreat in prices, investors have predictably reacted by jumping into safer assets like 10-year treasury bonds. If the scenario that’s currently playing out gains traction, and equities continue to nosedive, look for 10-year treasury bonds to decrease their yields and henceforth cause a drop in mortgage rates.
A decrease in mortgage rates, below 6.5% in previous periods over the past 24 months, has generated parallel spikes in home buyer mortgage applications. Essentially, bad economic news causes fear, fear causes selling of stocks and retreats to safe havens, like bonds. Therefore, yields/percentages on bonds and mortgages typically decrease. All things holding consistent, a drop in mortgage prices would absolutely bring a surge of buyers back into the lackluster housing market.
Mortgage rates plus dismal housing inventory have been the two major headwinds facing the housing market recovery. And movement of mortgage rates closer to 6% would absolutely fuel a resurgence in demand, based on the previous market reaction to small dips toward lower rates.
The only caveat to this would be if a downturn in stock prices lead to an economic recession. Which, in that case, could suppress consumer confidence, and following suit, put the brakes on a housing demand resurgence. For the record, there are little to no signs of a recession on the horizon, with financial markets purely speculating and reacting to tariff news over the last 2-weeks.
Pending housing sales in Montrose Colorado have diminished 29% over the past month relative to last winter. In contrast, or possibly in reaction to, median home prices in the Uncompahgre Valley did not come down like they normally due in the winter months. The median sale price of a home in Montrose trended at $480,000, which is a staggering 13.5% higher year over year.
No matter what happens with the stock market, housing is still a boring and safe investment. Especially during times of heightened uncertinancy.
Click Here to View Residential Sold – February
