Positive Housing Market News

Positive Housing Market News

I thought this was a great article from the folks at HomeFinder.com. There is some good news in our housing market. Home prices have remained pretty stable compared to last year. The bad news is the number of sales are down. But sales could climb back up next year if the job market keeps improving! If you are looking for a new home or investment for your portfolio, now is the time to buy with prices and rates so low!!!

HomeFinders.com Article From 12/7/2010

In a recurring theme over the past few months, reports from the National Association of Realtors show that existing home sales have once again fallen well short of their tax-credit-fueled highs of a year ago as the traditional winter slowdown continues.

According to the report, existing-home sales occurred at an annual rate of 4.43 million during the month of October, dropping 2.2 percent compared to September and falling 25.9 percent short of sales figures from October 2009, when the federal first-time hombuyer tax credit was still driving buyers into the market.

So far this year, there have been 4.15 million home sales, down 2.9 percent from the 4.27 million through the first 10 months of last year. However, analysts say that the stalled foreclosure sales in many parts of the country may have played a role in at least part of the drop in sales, and that the market for homes for sale across the country is much improved.

"The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales. Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels," said Lawrence Yun, NAR chief economist. "Based on current and improving job market conditions, and from attractive affordability conditions, sales should steadily improve to healthier levels of above 5 million by spring of next year."

Despite the significant drop in sales, home prices have remained relatively stable. The median price of homes for sale which changed hands during the month was $170,500. Compared to October of last year, the median home price was down roughly 0.9 percent.

The total housing inventory has also fallen, although that number may also be affected by the large number of distressed properties waiting to go on the market. According to the NAR, the total number of homes for sale dropped 3.4 percent during the month to 3.86 million homes - representing a 10.5-month supply at October's sales rate. That's down only slightly from the 10.6 months of homes available in September, but still well over the 6-month supply Realtors say is found in a "balanced market."

However, the NAR added that extent of the real estate market's recovery would hinge on the ability of potential buyers to get affordable financing, saying that lenders have enacted very tight lending standards which are disqualifying many borrowers with solid credit histories.

"A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgageinterest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified homebuyers who are willing to stay well within budget," Yun added.

However, mortgage lenders have shown very few signs of loosening their hold on the market, after bad loans were widely cited as one of the main causes of the housing market's recent crash - a scenario banks are being over cautious in order to avoid repeating.

A recent survey of loan officers by the Federal Reserve found that most feel that the tightened lending standards will remain in place in the coming months. Out of more than 50 lenders surveyed, just 15 percent felt that their lending standards would return to their average level sometime during 2011. In addition, less than 20 percent felt that their standards would loosen sometime in 2012, and 15 percent believed that change wouldn't take place until after 2012.

However, the most telling part of the survey was that 34 percent of respondents said that they didn't see their residential mortgage lending standards returning to their average levels any time in the "foreseeable future."