I was interviewed yesterday evening by Bob Morrison with the Broadcast News Service concerning the general state of the housing market.
Today’s release of September New Homes Sales data is expected to show a modest increase. With interest rates at all-time laws and prices being slashed, one would expect to see much more activity.
According to Lawrence Yun, chief economist at the National Association of REALTORS®, "A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium."
Based on what I see locally in the greater Dallas Real Estate market, I would agree that the next few years are going to be “choppy” but not simply because of the impact of the foreclosure moratorium. I think there are some larger issues at work.
The two bigger issues are the general state of the economy and the tightened mortgage lending standards.
People are not rushing out to purchase big-ticket items because they’re not secure that they will have continued employment. The economy is still very weak and until we get Main Street back to work, I don’t see people purchasing homes on Main Street in large numbers.
I’m often asked, “How low do rates have to go to get people back in the market?” I think that’s the wrong question! Rates are at historic lows with rates on a 30-year fixed rates mortgage below 4 percent with some lenders. Many people who can qualify have already refinanced their mortgage and plan to stay put for a while. The lending industry did a “180” on underwriting standards and many people who are making their payments on-time simply cannot qualify to refinance or purchase a new home.
The other elephant in the room is the massive balloon of adjustable rate mortgages coming due in 2011. As long as interest rates remain low, the impact in 2011 should be minimal. However, the bubble does not go away, it slides in 2012 and later years. Granted it gets smaller each year, but it will take five years or so to disappear.
Much of what happens in the next few years depends on getting Main Street back to work and for the lenders to let the mortgage underwriting pendulum swing back towrds center.
Source: http://www.thebranchteam.com/wordpress/2010/10/27/state-of-the-housing-market/
Tom Branch and Gina Branch, The Branch Team with RE/MAX Dallas Suburbs, service the greater North Dallas suburbs including Dallas, Plano, Allen, McKinney, Frisco, Lewisville, and Carrollton. While Gina concentrates on traditional listings and buyer/tenant representation, Tom specializes in assisting distressed homeowners to avoid foreclosure. Tom and Gina have published two books (Achieving Rock Star Status and The Field Guide to Short Sales) and are available for speaking engagements in the greater Dallas - Fort Worth Metroplex. Subscribe to The Branch Team Blog.
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