For a third straight week, mortgage applications were on the rise according to the Mortgage Bankers Association. Simultaneously, interest rates were dropping and the fall and bail-out of Fannie Mae & Freddie Mac were in full swing.
It’s interesting isn’t it, that mortgage applications are up – indicating more buying activity – while all of the news in the media is about the gloom and doom facing big lenders.
Here’s a simple economics lesson: A “leading indicator” is a sign that people look for that historically has signaled a particular event in the future. In other words, events or happenings that are considered “leading indicators” tend to be predictive in nature.
One leading indicator is mortgage applications. As that number grows, the underlying real estate market tends to follow. Why? Simple supply and demand. As more people get in the housing market, housing prices tend to rise. Very simple.
I’ll have more to say about this in coming days. So remember for now that there are a lot of a very positive signs in the real estate market for anyone who is willing to look for them!
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I am always looking for positive news when it comes to the real estate market. Check out todays cover story of Barron’s…”Bottom’sUp: This Real-Estate Rout May Be Short-Lived” by Jonathon R. Laing.
I don’t put much weight in much of anything I read in the national publications for several reasons, not the least of which are:
a) these clowns don’t know what they are talking about (buying your own residence does not make one an expert); and
b) by the time they have done their “research” it is old information they are reporting on (hardly relevant when your in the trenches).
Also, there might be another reason why mortgage ap’s have “grown”. Many people trying to get out of those ARM’s the media keeps bombarding us with negative news about.
In this case, that’s not the explanation. The data from the MBA breaks down mortgage applications into both refi requests and purchase money requests. Both are up strongly. — Bryan Ellis
Along that line, I did see an interesting graph yesterday that showed that the next major % ARM’s to adjust will hit us some time in 2012. So, unless we see alot of new ap’s between now and then we may want to keep our eyes peeled for the months leading up to that time period.
Just wondering how long till those free websites come out?
Working on it, literally as I write this! Remember – the idea was only hatched about 2 weeks ago and I said it’d be about 60 days or so. Thanks for your patience! –Bryan Ellis