Real estate agents and brokers say turmoil in financial markets is planting doubts in the minds of some would-be homebuyers even as it signals opportunity for others.

Plunging stock prices initially sparked by Friday’s downgrade of the U.S.’s long-term debt rating and reinforced by lingering fears of a European debt crisis don’t necessarily signal that the U.S. is headed into a "double dip" recession.

So far, investor flight to the relative safety of bonds and mortgage-backed securities that fund most home loans has pushed the cost of borrowing down — a boon for both homebuyers and homeowners looking to refinance.

But recent revisions to previous Commerce Department reports on economic growth show the depth of the recession was worse than previously known, and that growth has been more anemic this year than previously reported.

If that trend worsens, and unemployment rises as the workforce grows faster than new jobs are created, that could undermine home prices in some markets, making it harder to get buyers off the fence.

"We had gained quite a bit of positive momentum over the last several months," said Hinsdale, Ill.-based broker Brian S. Hickey of "We seem to be giving up that confidence at the moment, with buyers taking a wait-and-see attitude for today, anyway."

Hickey said helps buyers, including builders and investors, who want to build new homes on infill lots.

"Over the last several months our market demand has actually outpaced supply," Hickey said. "We began to see multiple offers and heavy inquiry for redevelopment property opportunities. I am speaking in past tense because of the recent setback in the equity markets — we operate on a minute-to-minute basis."

Lloyd Binen, a Santa Clara County, Calif., Realtor since 1976, said he recently had a client who was set to buy a brand new townhouse in Mountain View back out of the deal.

"She was actually having a little bit of nervousness and cold feet before Friday, when the stock market tanked," Binen said. "It wasn’t exclusively the stock market that changed her mind … it just put it over the edge for her."

Binen said other clients of his who aren’t yet in contract "want to wait and see where the dust settles. Certainly a person buying a home has a heightened sense of anxiety. They are about to make a commitment for such a large purchase, they feel (the uncertainty) a little more intensely."

But Santa Clara County is in the heart of California’s Silicon Valley, and "people working in the tech companies don’t even know there’s a recession going on," Binen said. "Our market has actually been very firm."

In Kent, Wash., loan originator Rhonda Porter of Mortgage Master Service Corp. said she’s not seen homebuyers getting cold feed.

"Most homebuyers seem very motivated by the extremely low mortgage rates that are available," Porter said. "If anything, the issue that I see homebuyers having is either lack of inventory or difficulty dealing with bank-owned properties."

The Mortgage Bankers Association reported Wednesday that applications for refinancings shot up 30.4 percent during the week ending Aug. 5 compared to the week before, as mortgage rates hit lows for the year. But demand for purchase loans was down slightly on a seasonally adjusted basis.

"Over the past month, refinance application volume has increased by 63 percent," said Mike Fratantoni, the MBA’s chief economist, in a statement. With loan ceilings for Fannie Mae, Freddie Mac and FHA scheduled to drop at the end of September, refinance applications for jumbo loans also increased by almost 75 percent from the previous week.

Meanwhile, applications for home purchase have remained little changed through the summer, Fratantoni said.

Beulah Stidham, president of Torrance-based Madrona Park Escrow Inc. and the Escrow Institute of California, said it’s probably too soon to tell what impact recent turmoil in financial markets will have on homebuyers.

"I think they’re all waiting to see what’s going to happen, because we’ve never had a downgrade (of the U.S.’s long-term debt rating) — it’s always been AAA," Stidham said.

But even before the downgrade, Stidham estimated 10 to 15 percent of buyers were getting cold feet before reaching the closing table — often because of fears that the home they were thinking about purchasing wouldn’t retain its value.

Would-be buyers also get discouraged because short sales and bank-owned properties often take longer to close than they expect, or lenders demand more paperwork before approving a loan.

"They think if it’s so hard, maybe they shouldn’t be doing this, and wonder whether what they are (thinking about) buying today will be worth that much tomorrow," Stidham said.

Phyllis Yanagihara, a certified senior escrow officer with Glendale, Calif.-based Master Escrow Inc., said that lately she’s seeing the usual mix of reasons for cancellations. Some buyers will always get cold feet, "and unless they have a really good agent (who) is able to deal with their fears and basically resell them on the property, there are a variety of reasons for cancellation."

Yanagihara said she had one buyer cancel this week because of homeowners association restrictions, another because of inadequate guest parking, and another "because her parents didn’t like the property. But they mostly cancel because the buyer can’t qualify for the loan, or if it’s a short sale, the approval is taking so long that they begin searching for another property."

"All buyers are experiencing frustration with the length of time it takes just to get a basic loan approval, though, and I am seeing some of the less-than-professional loan officers of the past sneaking back into the mix," she said.

"We will really have to see how things play out over the next several weeks to see if there is a longer-term effect," Hickey said. "Right now, my response is from the gut, as well as some first-hand feedback from a local builder that said he is in ‘wait and see’ mode."

Justin Knott, an associate broker at Ten Peaks Sotheby’s International Realty, said that turmoil in financial markets can make real estate look like a relatively safe investment, especially in resort markets like Summit County, Colo., where he is based.

"Contrary to mainstream media reports that seem to lump the entire nation’s real estate markets into one, we have had several buyers who have told us they see the recent stock market volatility as a possible opportunity for a more stable long-term investment," Knott said.

Economic output increased at a slower-than-expected 1.3 percent annual rate during the second quarter, and first quarter U.S. gross domestic product growth was was adjusted down to just 0.4 percent — not the earlier-reported 1.9 percent — according to a Commerce Department report on July 29.

"Everybody is redoing their forecasts based on this new data," which shed light on why job growth has failed to even keep pace with growth in the labor force, Gary Zimmerman, senior economist with the Federal Reserve Bank of San Francisco, told real estate professionals attending Real Estate Connect San Francisco.

Zimmerman said the San Francisco Fed’s research suggests that if foreclosures continue to decline, "we’re likely to get some turnaround in housing by 2014."

Fannie Mae Chief Economist Doug Duncan said the U.S. is probably a little more than halfway through a 10-year adjustment period following housing market peaks in 2005 and 2006.

Fannie Mae Surveys about 1,000 consumers a month, and Duncan said that although they understand interest rates are low, they don’t expect them to go up anytime soon.

They are worried about further price declines, are not happy with where the economy is going, and "wonder why you (real estate professionals) think it’s a great time for us (consumers) to borrow $200,000 to buy a house."

Duncan and Zimmerman spoke after the release of the revised Commerce Department numbers, but before the historic decision by Standard & Poor’s to downgrade the U.S.’s long-term debt rating by one notch, to AA+.

Both the Commerce Department revisions and the Standard & Poor’s downgrade — plus new fears that the European debt crisis will affect even stable countries like France — was a factor in a stock market bear run that’s sent the Dow Jones Industrial Average plunging.

But "markets are not the economy, and the economy is not the markets," author and commentator Daniel Gross said Wednesday on his Yahoo Finance blog, "Contrary Indicator."

Recessions are visible only in hindsight, but many of the indicators economists keep a close eye on "are not flashing recession," Gross said.

The most recent survey by the  Institute for Supply Management shows manufacturing and services were expanding in July, he noted, and statistics on retail sales, car sales and credit card delinquency rates show the economy was expanding, but tentatively.

"In order for the U.S. to enter recession, virtually all the metrics that have been signaling expansion would have to start flipping negative this month," Gross said — something we won’t know until much later this year.

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