January housing data mostly cloudy

    Real estate agents like to think that plenty of people with the ability to purchase a home are sitting on the sidelines, waiting for a signal from lower prices, lower interest rates and relief from Washington before they pull the trigger.  One wonders, with the latest sales report, just how low we have to go before people start coming in from the sidelines.  
     Sales of existing homes nationwide declined another 5.3% from December numbers, the lowest level of activity in 12 years.  The total of 4.49 million units, reported by the National Association of Realtors, was well below analysts' estimates.
    I'm not a big fan of the customary glass-half-full analysis of the NAR's chief economist, Lawrence Yun, but he made one reasonable point in announcing the sales figures, that many people deferred buying a home in January because of the pending stimulus package for housing.   
    "[They] simply sat out for clarity and certainty on the nature of housing stimulus," he said.  Of course, never one to pass up the opportunity to conclude that happy days are just around the corner, Yun added that falling interest rates and house prices should spur the market in coming months.  In Mr. Yun's world, niggling issues like unemployment figures, consumer confidence and general fear seem to occupy a minor position in making housing market predictions.  
    But there may not be an interest rate low enough to spur the fearful to buy anything at this point.  Personal example:  My teenage daughter now has her license, and we need to buy another car.  I was sucked in by the ads for a zero interest loan from General Motors for any of its cars -- until I read the fine print and realized you still have to commit to paying $16.67 per $1,000 borrowed per month.  Millions like me are just not ready for that kind of commitment, "free" money or not.
    Housing prices are also working their particular brand of psychological magic on those who might otherwise rush in.  People who have a home and want to move are bummed that they have lost as much as 20% of their value in the last two years, even if they have tens of thousands of dollars in equity left over from the dramatic run-up in prices in earlier years.  They are waiting for a recovery before they move, even if, intellectually, they understand that the next home they buy also will increase in price (maybe more than their current home).  
    These homeowners are actually the only ones in this market in a somewhat secure position -- for now.  If they sell their homes today, they can take the equity and use it for another home.  If market values continue down after they move, so what?  They would have likely lost more money on their home if they hadn't sold it.  Worse, though, would be if they stayed put and, in a continuing downward spiral, watched all their equity erode.  Then they might not have enough left to put down on the next house.
    Going into gridlock is probably not the best response to uncertainty.