If You Want to Buy a Home This Year, Here's Some Really Bad News

A slew of recent reports suggests that the housing recovery is faltering. But there's one that should be of particular concern to prospective homebuyers.

Mar 2, 2014 at 11:00AM


The housing recovery is buckling under the weight of higher mortgage rates and bad weather. According to a report released on Wednesday, the market for purchase-money mortgages is at the lowest level in nearly two decades.

To give you an appreciation for the extent of deterioration, check out the following chart. This is an index compiled by the Mortgage Bankers Association that tracks purchase-money home loan volumes throughout the banking industry.

As you can see, the news isn't good.


According to the MBA's latest estimate, the volume of mortgages for home purchases as opposed to refinancing is at the lowest point since August1995 -- the same year Coolio and TLC topped the music charts with the timeless ballads Gangsta's Paradise and Waterfalls.

To make matters worse, this is happening just as homebuyers begin gearing up for the spring selling season. "Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it," said Mike Fratantoni, the association's chief economist.

The news comes on the heels of at least three other similarly downbeat reports. Two weeks ago, the Commerce Department reported housing starts dropped by 16% in January compared to December. Two days later, the National Association of Realtors released data showing that existing home sales fell in January to the lowest level in 18 months. And last week, a widely tracked measure of home prices showed that they receded on a sequential basis in the final month of 2013.

The one exception has been new home sales. On Wednesday, the government said that sales of new single-family homes in January grew at the fastest pace in more than five years. According to the Commerce Department, the figure jumped by an impressive 9.6%, to a seasonally adjusted rate of 468,000. This is its highest level since July of 2008.

Suffice it to say, any sustained faltering in the housing market would be highly detrimental to both the economy and to stock prices. While these results could be the result of unseasonably severe weather, as many suspect, it's nevertheless something that investors should watch carefully over the coming months.

From buying a house to buying a car
You don't know it yet, but you probably spent thousands more than you should have on your vehicle. In fact, the auto industry can be such a dangerous place for consumers that our top auto experts are determined to even the playing field. That's why they created a brand-new free report on The Car Buying Secrets You Must Know. The advice inside could save you thousands of dollars on your next car, so be sure to read this report while it lasts. Your conscience, and your wallet, will thank you. Click here now for instant access.

Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information