The housing market is a cornerstone of the nation's economy and when it begins to crumble it only makes sense to shore it up with some fresh plaster.
When the Federal Open Market Committee decided this week not to raise the federal funds rate it was, in part, a reaction to conditions chipping away at the very foundation of the economy.
"The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market," said the Fed in a prepared release.
The Fed also said inflation remains, albeit at a slower pace, thanks also to easing energy prices and effective monetary policy, but the message was clear.
As goes housing, so goes the economy.
The message for consumers is also clear. Now is a good time to consider professional advice about buying, holding or banking on what's likely your greatest financial asset.
Here's why.
For years, the housing market was a bastion of double-digit inflation fueling a soft but humming economy with real estate cash from home buys, home improvements, equity tapping and growth in the number of home owners. Even as the stock market stumbled with fits, starts and stops, housing buoyed the economy.
Unfortunately, record levels of housing demand and spending boosted home prices beyond the affordability of more and more consumers. Consumers balked and sales this year have been falling like a rock.
At the current pace of change, what's now single-digit price appreciation will become price depreciation in many markets before the end of the year, according to forecasts.
Meanwhile, earlier this year, the rise in mortgage interest rates offset early, slight pricing differentials that otherwise could have allowed more buyers into the market.
Existing home owners, especially newer home owners with adjustable rate mortgages (ARMs) and or home equity loans (which typically are even more adjustable) are now watching their home equity languish and wilt as their ARMs and other high-leverage loans tick like time bombs.
If monetary policy doesn't give home buyers a chance to take advantage of lower home prices and pulls the rug out from under home owners who'd like to tap their equity, consumers could leave the economy to the energy, manufacturing and service industries and take their trillions with them.
Mortgage lenders have already adjusted staffs to serve a shrinking demand and they are feeling the pressure to keep mortgage interest rates affordable.
The average interest rate on a fixed rate mortgages (FRM) for a conforming 30-year loan peaked this year at 6.8 percent on July 20. The average rate has fallen to 6.40 percent for the week ending September 21, according to Freddie Mac.
Some experts had predicted mortgage interest rates of 7 percent or more by now.
"A slowing housing market and signs that inflation is leveling off have helped to lower mortgage rates lately and keep them more affordable," said Frank Nothaft, Freddie Mac vice president and chief economist.
"Going forward, the economy is expected to expand at a somewhat slower rate than it did in the first half of the year. This should continue to keep inflation in check, and therefore, mortgage rates low," Nothaft said.
Does that mean you'll get a shot at both lower home prices and affordable mortgages after all? Should you wait out the market, rent now and buy low later? Should you refinance your mortgage? If so, what vehicle will best allow you to ride out the change?
If you have to ask, you need help.
A REALTOR®, financial advisor, or other professional trained in financial planning that includes home ownership is perhaps the best investment you can make right now if you are considering a home purchase or tapping equity.
An investment in a home is rarely a sole financial consideration but part of a more holistic approach to your personal financial planning and goals.
Don't buy a home because the time is right.
Buy a home because you've learned the time is right for you.
