In 1951, television was in black and white, computers were the size of a 747, and the rate for a 30 year fixed-rate mortgage was just about 4.19%
This week, a new flat panel, 3D television that does not need special glasses was revealed, computers are married to telephones which fit in your shirt pocket, and the rate for a 30 year fixed-rate mortgage is just about 4.19%
You read that right. Mortgage rates are at record lows; the WSJ saying that Freddie Mac figures they haven’t been this low since before “I Love Lucy” first went on the air!
So, people should be flocking to their real estate agents buying up homes left and right. Right? Wrong!
One big difference between 1951 and 2010 ( other than the fact that people, in general, are far less literate but do know the entire year line-up for “Dancing with the Stars”) is that in 1951, people actually went to work each morning. They were able to do this because they actually had jobs. You remember jobs? That’s where you go , usually on a daily basis, to earn enough money to afford to buy a house while taking advantage of interest rates as low as 4.19%.
Now, unlike 1951, the unemployment rate remains steady and high; the economy shows little to no signs that it will produce lots of private sector jobs anytime soon; state and local governments are laying off workers; and the housing industry, especially in states such as California, Florida, Arizona and Nevada, remains shattered. And, that’s a nice way of putting it.
But until people actually have jobs–and ones that pay wages that mean something–it doesn’t matter if the 30 year fixed rate drops to 1%. If you don’t have a job, you are not going to buy a house. Simple as that.
In fact, the dropping rate is a bad sign–a temperature showing the patient is not making a recovery. Except, in this case, the lower the numbers go, the worst off it means the patient is. In this case, the patient, of course, is the economy.
The rates are so low because there is not much competition out there for new mortgages. In fact, most of those thus far taking advantage of the lower fixed rates are those who still have jobs and credit and are able to refinance. But that does just about nothing to get the economy going. Only sales of new or exisiting homes will do that and the figures there have not been very encouraging for a long time now.
1951. We were so innocent. We were so socially conservative. We were so employed!
Photo: Jamie Cox