Fact: 30-year-fixed mortgage rates dropped below 4 percent for the first time on record, according to Freddie Mac, which has tracked rates since 1971. Yet, the stats show that Americans have not responded by rushing to buy houses. Fact: Real estate investment trusts (REITs), a breed of stocks that pool investments in underlying real estate like hotels or apartments, dropped 13.3 % in the 3rd quarter, marking the first time in two years that the sector has gotten hammered. Fact: The “conforming loan limit” — the point at which mortgages are supported by quasi-governmental agencies — dropped this past weekend by around $100,000, and rates for medium-sized loans jumped about one-quarter of 1 percent. (GALLERY: Car Collector Dream Homes) Fact: In an analyst’s report cited by Businessweek, Merrill Lynch cut its forecast for issuance of commercial mortgage-backed securities in 2011 from $45 billion to $25 billion, fairly close to the $20 billion amount that’s already been issued so far this year. Add up all these facts and pause a moment. The sound you hear is gears grinding, without the grease of credit. It’s always a tough pronouncement to say that credit is tightening, because lenders — who are the parties who could really confirm such an action — never want to hang a “gone fishin’” sign on the office door. Yet on the commericial side, the skid in the mortgage-backed securities market and the decline of REITs points to a future without much liquidity — probably Wall Street being nervous about European debt problems. Of course you didn’t need me to tell you that; anyone who owns a share of stock understands that Wall Street is pretty jittery these days. What about the residential real estate market? The Mortgage Bankers’ Association’s weekly survey of mortgage applications showed a decline in demand this week, dropping by 4.3% on a seasonally adjusted basis. Since applications had popped the week before, it looks like the demand side is healthy — but shouldn’t the lowest rates in four decades be stirring up even more of an … Continue reading Real Estate Market Mystery: Record Low For Mortgage Rates, But Nobody’s Buying