Things Lookin' Up?

Things are starting to look up in real estate from what recent reports and the NAR indicate. It may be a temporary positive glich, but with widening credit availability and low interest rates holding steady it sure does look like a recovery is slowly under way. I’m sure this is no news to anyone in the business. Of course everyone likes a positive attitude...why not?

Conforming loans are becoming very available at historically attractive mortgage rates. There have been adjustments in pricing for jumbo mortgages, and subprime mortgages are being replaced by FHA loans.

One thing that gives the market perspective is the news that 2007 will be the fifth highest year on record for existing-home sales. 2005 was an unsustainable peak. It was overloaded with speculative buyers. These spec excesses have been removed from the market, and home sales are starting to return to normal.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said, “Housing is still a good long-term investment, and we’ll be seeing a broad, modest improvement in home prices in 2008. With widely varying conditions, the best advice for consumers is to consult a Realtor® in their area to learn about local market conditions because supply and demand can change from one neighborhood to the next.”

Of course loans in our neighborhood are in excess of double the $417K conforming rate. (Jumbo rates are in the 7.11% range, conforming loans are in the 6.0% range.)
Jumbo loans are a little more problematic than conforming loans.

Only when the creative mortgages experienced in 2005 return (what?), will real estate return. Or, mortgage lenders would be required to follow good faith and fair dealing requirements, with a fiduciary duty toward borrowers.

Anything’s possible.

One man’s opinion.