It’s official: The housing market has reached bottom. . . at least according to 44 forecasters surveyed by The Wall Street Journal. Only three economists surveyed said they didn’t think the market had reached bottom yet. The recent momentum in housing has plenty of economists and forecasters convinced that the worst is behind. According to many real estate indices, home prices are up, sales of existing and new homes are picking up year-over-year, and inventories of for-sale homes have fallen dramatically. The decrease in for-sale inventory is the key and will likely help maintain the rise in home prices, Mark Fleming, CoreLogic chief economist, told The Wall Street Journal. What’s more, the number of vacant homes is at its lowest point since 2006, The Wall Street Journal reports.
Now that the “bottom” has been reached, economists admit there’s still a long way to go for a full recovery. In particular, more than one in every four home owners with home loans are still underwater, owing more on their loan than their home is currently worth. However, analysts note that rising home prices are chipping away at that number. Also, shadow inventory of unsold homes and foreclosures still threaten the momentum of the recovery as well. “From here on, housing is unlikely to drag the U.S. economy down further,” JPMorgan Chase economists note. “It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses.” Source: The Wall Street Journal
Applications for home loans increased 16.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending July 13, 2012. The Market Composite Index, a measure of loan application volume, increased 16.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 46 percent compared with the previous week. The Refinance Index increased 22 percent from the previous week and is at the highest level since mid-June. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index increased more than 25 percent compared with the previous week and was three percent lower than the same week one year ago. “Refinance application volume increased last week to near peak levels for the year as rates dropped to a new low, driven down by growing concerns about the health of the U.S. economy,” said Mike Fratantoni, MBA’s vice president of research and economics. “Applications for HARP refinance loans accounted for 24 percent of refinance activity last week, in line with the HARP share for the past few weeks.” The refinance share of activity increased to 80.1 percent of total applications, up from 77 percent the previous week. Source: MBA Looking to refinance? This could be the opportunity of a lifetime. Contact us to see if you can take advantage of these low rates and new government sponsored programs.
While Americans are more pessimistic about the direction of the economy, their optimism regarding the housing market continues to grow, according to Fannie Mae’s June 2012 National Housing Survey. Low prices and record-low rates are helping to lift Americans’ views on housing, according to the survey. “While consumers remain cautious about the general economy, their attitudes toward the housing market continue to improve,” says Doug Duncan, Fannie Mae’s chief economist. “Although this positive trend may be short-lived if the general economy falters, one might ask whether consumers are increasingly seeing the current environment as a unique opportunity to buy a home while home prices remain depressed, rental costs are increasing, and rates are near historic lows.” Thirty-five percent of the Americans surveyed say they expect home prices to rise within the next year, with expectations that home prices will rise 2 percent within that time. That marks the highest increases since the survey began in June 2010. Also, 73 percent of the Americans surveyed said that now is a good time to buy, which matches the highest number recorded since the survey began. Source: RISMedia Journal
With lenders extending credit more cautiously since the housing crisis, parents and grandparents increasingly are stepping in to help the younger generation with home purchases. A recent Better Homes and Gardens Real Estate survey found that 20 percent of Baby Boomer parents have helped a son or daughter to buy a home by co-signing on the home loan, offering a down payment gift or purchasing the property outright on their behalf. Lower housing prices and rates are making it easier for parents to help their children, said John Boschen, professor of economics and finance at the College of William and Mary’s Mason School of Business. “The parents-(or family)-helping-kids-buy-a-house phenomenon has long been prevalent in other countries, especially in developing countries,” Boschen said.
Source: Virginia Pilot
Senior Director, Coldwell Banker New Homes Division
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“Fewer properties for sale with such remarkably low interest rates make it a great time to buy and not a bad time to sell”