Housing Momentum Builds-Perils Persist

The Wall Street Journal reports Wed, Jan 27, “There’s new evidence the housing market is healing after  a 4 year slump. The danger of further price drops remains among persistent job market weakness.”

As reported in my blog earlier this week, housing inventories are down sharply across the U.S. the decrease is supply has sparked bidding wars in low-end properties.

The current supply of homes would last about 4 months or less at current inventory levels. A 6 month supply is considered a balanced market (equilibrium).

“We’ll probably be seeing a strong spring selling season in most of the nation”, says Jody Kahn, VP of John Burns Real Estate Consulting.

Economists say mortgage rates, currently around 5% for standard 30 year fixed rate loans,are likely to at least moderately higher later this year as the Federal Reserve withdraws support for the market. Rates could end up around 5.75% according to Moody’s Economy.com.

foreclosures could soon put downward pressure on prices. More than 7 million households are behind in their mortgage payments or in foreclosure, and lenders will put many of those  on the market. Unless the job market improves, buyers for those homes will be harder to find and prices could lurch further down.

Meanwhile, the lower end of the housing market has gained strength.

Your personal real estate decisions should be based on an exact assessment of the current market and what can be forecast for the immediate future. My expertise in the local market as well as my exposure to information from throughout the country and with my contacts in various sectors of the government and housing industry, gives you an unmatched resource at your disposal, to get the information critical to making your BEST decisions.

Call me or email me at 510 881 1761 or dsouza@deansouza.com for my take on Castro Valley, Alameda and Contra Costa counties and Bay Area Real Estate in general.

Visit my website at www.deansouza.com for links to the Multiple Listing Service, Twitter and Facebook.

Bye for now,

DS

“Without a return to job growth, it will be hard to sustain demand and mortgage defaults will lead to foreclosures, dumping more inventory on the market.”