Rockland Real Estate Trends & Forecast

When will the shine shine? Trends and The Forecast Comments:

From some trusted financial experts:

TRENDS:

According to Ken Fears in his recent article "Overcoming Uncertainty" lower mortgage rates should have improved affordability by reducing rates. Lower rates would draw down monthly payments in an environment of flat prices. If prices fell, payments would fall that much more, boosting affordability further. As a result, home sales should have improved. However, the malaise of bad news about the economy, the banking system, foreclosures and the national housing market has created questions.

The sub-prime fallout created much consternation in the housing markets this past fall and sales fell as a result, despite a sharp decline in conforming mortgage rates. Here in the areas covered by the Greater Hudson Valley MLS sales fell -37.3% between the first quarter of 2008 and the fourth quarter of 2007. Consequently, it is unlikely that the sharp decline in rates pierced buyers' uncertainty about the housing market in the local area. Sales were strongest in January, suggesting that buyers only responded slightly to the sharp decline in rates during January.

Mr. Fears writes that the uncertainty in the housing market will continue through most of 2008. But little by little, we will see shapes in the fog. Sales levels and inventories have begun to plateau at the national level. Foreclosures will continue to rise, but at diminishing rates. Removing the uncertainty will do much to boost confidence.

THE FORECAST

According to Lawrence Yun, Sr. V.P, Chief Economist ... Mr. Yun reports some bright spots. The Northeast region continues to show some good signs of recovery. In March, pending home sales ROSE 12.5%. Some local market fared better than others. Existing home sales (closings) finished the first quarter of this year with a 4.95 million annualized unit sales price. This is essentially unchanged from the 5.00 million existing home sales in the fourth quarter of last year. Home sales will continue to trend soft in the current quarter with the expectation of 5.01 million sales. In the second half of this year, look for a measurable lift to the 5.6 to 5.9 million unit range.

Tax rebates, solid exports, and solid business profits are pointing towards better times. These factors indicate that the economy will be better in the second half of this year after having stalled in the first half.

All that means that home prices will also improve in the second half of 2008 in many parts of the country. Even though the national median price will be lower in 2008, due to the weak first half and major price declines that already occurred in few markets, more than half of the country is likely to experience a price growth this year.

Risks do still exist, very high oil prices could stick around that that will hold back consumer spending growth. Inflation could notch higher, which then will result in higher mortgage rates. Despite these risks, the economy and the housing market look to improve markedly in the second half of 2008. The momentum will carry forward to 2009.

Why? Both Fannie Mae and Freddie Mac have recently announced plans to further provide liquidity, including the higher conforming jumbo markets. FHA loans will become more widely used as many lenders are trying to get HUD approval for this product. Gone is the sigma as FHA being utilized for low-and-moderate income households with credit blemishes. More and more consumers will utilize the loans thereby steadily replacing the disappearance of the subprime loans. Therefore, mortgages will become more widely available

According to a local report from GHVMLS* the job situation still remains strong in Rockland County. Combined with historically low mortgage rates, home sales should continue at a strong pace.

TIME TO BUY NOW?

Anyone who has been out there looking at properties now knows full well that there is an overabundance of properties with which to choose from. Many sellers are motivated to sell at realistic prices and interest rates are still historically low. In my opinion, if buyers wait to see what everyone else does they may find themselves running with the pack when the pent up demand finally rushes out of the starting gate. In short "opportunities abound NOW". We are in a full blown buyers market.

Remember that not housing markets are suffering to the extent we've seen in Florida, Nevada, Arizona, California and the D.C. region. In many parts of the country, there has been no price decline. Rural America has seen virtually no declines.

So, there you have it folks. Stay tuned, I think it may get a bit rockier before our skies turn to a consistent shade of blue.

Angela Chan
Broker/Owner
Rockland County Real Estate
(845) 624-3900