The following article is from Realtor magazine, June 2011 ; by Lawrence Yun, Chief Economist of the National Association of Realtors.
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The first quarter ended with decent home sales activity, with existing homes selling at an annualized pace of 5.1 million. The remainder of the year should be better still for the following reasons:
- More jobs
- Rising stock market wealth
- Rising apartment rents
- Continuing high affordability conditions
- Home values at historically justifiable levels
- Investors looking to hedge against inflation
- Foreigners buying U.S. homes on the cheap
Other potential contributing factors, although they’re not happening yet, are huge bank profits translating into more desire to lend and some reduction to market friction as lender’s short sale approval processes improve and appraisals become less of an issue.
So, if existing-home sales either hold at the 5.1 million pace of the first quarter or improve on that, then the annual sales tally will esaily exceed the 4.9 million home sales we saw last year.
Still, the starts are not all aligned. There will be obstacles. High gas prices are a daily reminder that something is not right with the economy; that will hold back consumer confidence. Washington policy-makers are debating the ending of government guaranteed mortgages and requiring a minimum down payment of 10 to 20 percent on conventional mortgages, even though the FHA and VA mortgage programs have very low down payments and have yet to require a single dime of taxpayers’ money. And ther will be attemptys to chip away at the mortgae interest deduction by invoking class warfare – the “let’s go after the rich” approach.
At least through 2011, improving market developments shoudl outweigh the negative impact imposed by Washington policymakers.
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If you are considering purchasing, building or refinancing a home, acting sooner will afford you the lowest interest rates as well as the lowest home prices.
