Schuylkill County Real Estate: Why Rate cuts won't help the housing market much

I have posted about this issue before and I have gotten many comments telling me I'm crazy.

I've been in the mortgage business for over twelve years and I can honestly say that rates have had a very small impact on people's decision of whether or not they should buy a home.

The biggest factors I have seen are:

1) People's perception of where housing prices are going - If people think (as they do now) that the house they are looking at will be priced less in the near future they will wait (even if rates are at 1%)

2) People's need for a home (as opposed to renting) Obviously there will always be people who need more space and who need to live somewhere else, but in the current economic environment, many more will continue to stay put.

3) Mortgage Eligibility. The boom of the past several years was caused not by low rates, but by the enormous increase in eligibility. 100% financing with no-income and poor credit made buying a house too good to resist. Today, due to eligibility being pulled back, at least 50% of the buyers who were eligible in 2005 cannot qualify for financing right now. The truth is that eligibility today is probably what it should be, despite what you hear from the media. Is it too much to ask for someone to show enough income and have good credit? Is it too much to ask for someone to put 10% down when they buy a home?

I would be thrilled if rates continue to fall, because there will be many refinances that i will get paid on, but the concept that lower rates will help housing is one that i just don't subcribe to. Eventually (2011?) housing will rebound on its own (after the many homes in foreclosure get through the legal process and get sold) and people will get off the sidelines. They will start buying when they think that they will lose out if they wait. Even if rates are 7% instead of 4%