Like a lava flow advancing on a home in Hawaii, the mortgage meltdown that erupted in August has advanced and slowed, only to advance again, each time a little farther.
Fortunately, the Hawaiian home is insured. Fortunately for whom?
You can see the reflection of the mortgage meltdown in the stock behavior of the world's largest insurers. AIG, according to Forbes the 6th largest company in the world and member of the Dow Industrials, has seen its stock value ebb and flow like the lava.
Since August 3rd, when it stood at better than $70 dollars a share, the stock has lost value in fits and spurts, closely following the fortunes of major players in US financial markets. As of yesterday, AIG's stock showed a loss for the year of more than 11% .
Interest Rate Freeze Announced
Following today's announcement of an interest rate freeze for subprime borrowers, AIG recouped half its loss for the year in one trading session, doubling the best advance of any other Dow Industrial member.
Perceived risk is a funny thing. In a seller's market, it's the risk of scarcity that drives the real estate buyer to plunk down a signature on a contract. In a buyer's market, it's the risk of looking stupid that makes most of us keep our eyes averted and our hands in our pockets.
This market will turn around. In Tucson, where I live and work, the mortgage meltdown won't stop our population growth, which is predicted to continue at a clip of 2% per year through 2015. Our MLS indicates enough inventory for at least a year or so. Employment, which is strong, is not the whole picture. People move to Tucson for reasons other than employment, and many are dragging a great big nest egg behind them.
And that's the real estate opinion of this Tucson, AZ mortgage lender,
Mike in Tucson
