More Signs of Stabilization
Posted by Bob Dohn at 11/22/2010 12:19 PM 
Categories: Real Estate Analysis
Tags: real estaterealtyreal estate marketmortgagesmortgage interest rateshomebuyers
Categories: Real Estate Analysis
Tags: real estaterealtyreal estate marketmortgagesmortgage interest rateshomebuyers
According to a survey of nearly 90% of all first mortgage liens in the country by the Mortgage Bankers Association, the delinquency rate for home mortgages dropped in the third quarter of this year versus the previous quarter and also versus the same period last year.1
This can be seen as a hopeful sign that the torrent of home foreclosures may soon start to ease. When that occurs, inventories of bank-owned homes should subsequently start to decline, leading the real estate market towards greater balance in terms of supply and demand. Once supply and demand reach a proper equilibrium we can anticipate value stabilization and even growth. Most of the expert opinions I read, however, indicate that any real estate comeback will be tempered by the employment situation and by anticipated interest rate increases, as it is widely viewed that today's rates are not going to be around forever. This offset will cause any future market growth to be sustainable, making for a good long term real estate prognosis.
Meanwhile, mortgage interest rates continue to hover at historically low levels, which significantly enhances a homebuyer's buying power. Normally, this would fuel demand and drive up home prices; however, the current glut of inventory, coupled with weak employment and public fear generated by negative media, are putting a damper on demand.
The bottom line as I see it is that home affordability has never been and will probably never be better than it is right now. Anyone in a position to make a move today should do it. Whatever short term pain or worry notwithstanding, in the long run you'll be glad you did. It doesn't seem likely that the foreseeable future will present homebuyers with the combined benefit of such low interest rates and price rollbacks as we have today.
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
1 Source: RISMedia (http://rismedia.com/)
This can be seen as a hopeful sign that the torrent of home foreclosures may soon start to ease. When that occurs, inventories of bank-owned homes should subsequently start to decline, leading the real estate market towards greater balance in terms of supply and demand. Once supply and demand reach a proper equilibrium we can anticipate value stabilization and even growth. Most of the expert opinions I read, however, indicate that any real estate comeback will be tempered by the employment situation and by anticipated interest rate increases, as it is widely viewed that today's rates are not going to be around forever. This offset will cause any future market growth to be sustainable, making for a good long term real estate prognosis.
Meanwhile, mortgage interest rates continue to hover at historically low levels, which significantly enhances a homebuyer's buying power. Normally, this would fuel demand and drive up home prices; however, the current glut of inventory, coupled with weak employment and public fear generated by negative media, are putting a damper on demand.
The bottom line as I see it is that home affordability has never been and will probably never be better than it is right now. Anyone in a position to make a move today should do it. Whatever short term pain or worry notwithstanding, in the long run you'll be glad you did. It doesn't seem likely that the foreseeable future will present homebuyers with the combined benefit of such low interest rates and price rollbacks as we have today.
Bob Dohn
Coldwell Banker Residential Brokerage
140-A S. Roselle Rd., Schaumburg, IL 60193
Direct phone: 847-301-3126
Web: www.BobDohn.com
1 Source: RISMedia (http://rismedia.com/)
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