bostonbubble.com

john p · Joined: 10 Mar 2006 Posts: 1820

I know we were all scratching our heads when some reports were coming in about the market heating up in January. The people posting were pretty smart so it was hard to write them off without delving in to consider the basis for the possibility.

I think we had a perfect storm which buoyed this blip.

First, interest rates were on a deep decline and hit a bottom at the end of November 2006.

http://www.bankrate.com/ ... truncated ...

Go ahead Admin truncate me, I love it... Very Happy

Second, the weather was pretty warm.

Third, people that get yearly bonuses got their bonus.

Fourth, from a tax standpoint, sometimes it is cleaner to start fresh in a new year. If you buy late in the year and you're renting, the tax benefit from the mortgage and property tax is a wash with your standard deduction and deduction for rent. If you get a full 12 months of paying interest on your mortgage you run way past the standard deduction.

Fifth, the numbers are reported year over year. What was going on interest wise in the corresponding November/December of 2005 which corresponded to the condition in January 2006.

http://www.bankrate.com/ ... truncated ...

Interest rates were skyrocketing. I remember that. That steep increase in interest is what eroded house prices because it ate into affordability.

Sixth: What was the weather like in the fall of 2005 when people were out looking at homes which would affect the recorded sale in January 2006:

http://blog.weatherbug.com/Backyard/index.php?/backyard/2005/10/17/

Remember the heavy rains, the floods, the dams being under question...

Seventh: Sales were slow because the market had hit an inflection point and buyers and sellers were at an impass.

http://www.boston.com/news/local/articles/2006/07/09/homeowners_play_double_jeopardy/

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