Rising prices have helped lift underwater homeowners, or those who owe more than their property was worth, into positive equity, Barrack said today. Those people are now able to refinance mortgages at lower rates, reducing monthly payments and helping to bolster the economy, he said.
“What’s happened in the last year is that real values have accreted up so that they can refinance,” Barrack said. “Then the wife feels good about buying a new refrigerator. Dad goes out to buy a car. Everybody feels better but nothing has happened other than the Fed hitting its keyboard.”
Dallas Fed President Richard Fisher said last month that he’d like the U.S. to reduce its mortgage-backed security purchases program amid signs that the economy will probably grow at about 3 percent by the end of the year.
“We have a pretty robust housing situation right now,” he said at a conference in Abu Dhabi.
U.S. job growth slowed in March as employers hired fewer workers than forecast, the Labor Department reported last week. Payrolls rose by 88,000, the smallest gain in nine months, after a revised 268,000 February increase. The jobless rate fell to 7.6 percent from 7.7 percent as the labor force shrank.