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November’s Housing Weakness; December’s Refinance Wave

Tuesday, December 23, 2008  |  posted by Hugh Hewitt

Headlines today will report that the housing market was awful in November. No surprise there. As October’s stock market sell-off rippled through the economy, home buyers froze and walked away in November.

Today’s Wall Street Journal also reports on the huge surge in mortgage refinacing in December, a massive rush reported on my show a couple of times in the past two weeks by Roger Schlessinger, and one that arrived after a lot of the mortgage business had laid off its loan officers and closing teams. But those that have stayed in the business through ups and downs like Roger are having one of the best months of their long careers, and, he points out, there are lots of purchases in the stack as savvy buyers –some of whom pulled the plug in October– sense a bottom and return to pick up very reasonably priced houses.

The president-elect’s team would be smart to build on this beginning of a recovery in housing by assuring long-term mortgages for new buyers and refinacing families. Given the rise in inter-generational transfer of houses –tax-driven in some places like California where a change in ownership from parents to children can save the latter hundreds of thousands in property taxes over their life in a house– perhaps Congress should be focused on encouraging 40 or even 50 year mortgages at today’s affordable rates.

If housing recovers quickly, the economy recovers quickly. Congress and the president-elect should stay focused on that very basic fact.

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