Carlsbad, CA –My husband and partner, Mike Murphy, was once a mortgage banker who dealt directly with Wall Street. He tracked the markets like a hawk, and almost crowed when ugly unemployment numbers were announced. He wasn’t happy that people were losing jobs; rather, he knew that interest rates would go down–and that makes real estate more affordable.
Though Mike is now devoted exclusively to San Diego real estate sales, he still realized the significance of last week’s jobs report, which is the latest data point to drag down rates for today’s home buyers and would-be refinancers.
The numbers reported by the government are ugly, with the national Unemployment Rate in June — which represents a 25-year high.
As the percentage of out-of-work Americans grows, households will have less disposable income to pump back into the economy. And San Diego is no exception. You see, consumer spending represents a whopping two thirds of our economy and the swelling ranks of unemployed are forcing markets to adjust expectations about when the U.S. and San Diego will reach full recovery.
Inflation is the mortal enemy of mortgage rates. So, the perceived absence of inflation can therefore be its friend.
With fewer working Americans, we can expect slower economic growth plus a smaller probability for inflation over the medium-term. This is why mortgage rates are lower of late, off by as much as a half-percent from the peak.
And that helps to make San Diego real estate more affordable–at least for those with jobs. — Roberta Murphy