Lighting a Flame in the Housing Market

Published by julia | Filed under Market Trends, Miscellaneous, Real Estate, Shout Outs

On February 5, 2009, Freddie Mac reported that the average mortgage interest rate for current 30 year fixed-rate mortgages was 5.25% (5.29% in the southeast), up from 5.10% a week ago. The average interest rate for 15 year fixed-rate mortgages was 4.92%, up from 4.80% just last week. Only a year ago the 30 year rate was 5.67%. I bet some buyers who could have taken advantage of the rates when they were below 5% are now looking back and regretting… trying to see if rates would have gone lower. Picking a low point is hard to do and tricky to say the least.

Better than expected (though not great by any definition) economic news helped to move interest rates higher this past week. In the 4th quarter of 2008 the economy slowed 3.8% which was lower than many had been predicting and inflation did not increase very much. Personal income only fell about half as much as some of the experts had forecast.

In 19 years, housing has not been more affordable due to lower interest rates and lower home prices as it is now. Of course, the trick is that you have to meet the requirements of the banks which have extremely tightened their guidelines. Also, those homeowners who have gone through foreclosure or sold their homes through a short sale, have a big red flag waving on their credit report that all but eliminate them from the pool of buyers. This will more than likely be the case for this group of people for several years to come.

The National Association of REALTORS reported that in December 2008 existing home sales rose 6.3%! Not bad by any means.  And the Florida Association of REALTORS reported similar numbers as well. One can only hope that a decrease in the amount of housing available and possible housing stimulus activities by the new President could light a flame in the housing market.