Is There Light At the End Of The Tunnel?
February 21st, 2008 categories: Home Buyers, Prescott Real Estate Trends, Real Estate News
Things are picking up, you can feel it. The phone is ringing, Real Estate Agents seem a little more optimistic. Buyers that have been sitting in the stands are stepping into the court, realizing that this is a great time to buy a house. It’s not a surprise that last week brought a 12 percent jump in the number of people applying for mortgages to purchase a home. Could it be a hint that the Spring real estate market could be better than a lot of the pundits believe?
Well, it probably would be a mistake to make too much fuss over a single week’s statistical report from the Mortgage Bankers Association of America.
After all, the National Association of Realtors’ latest pending home sale index — which looks out over the horizon to predict sales activity a month or two ahead — registered a decline of one and a half percent.
But you can’t simply ignore all those new mortgage applications. They’re real. Somethings going on — and it could be that the word is finally getting out to consumers that home loan rates at an average 5.6 percent for a 30-year fixed-rate mortgage — are close to 40-year lows.
Money for home purchases right now is cheap, no question. And we all know housing prices are lower this year than they were last year – sometimes by 10 and 15 percent or more, depending on local market conditions.
So a 12 percent jump in purchase applications could be a significant development … or just a fleeting statistical fluke. We’ll keep you up to date on it.
Another potentially important factor looking forward: The federal economic stimulus package signed into law this week opens the door to more affordable home purchases in some of the hardest-hit, high cost markets in California, New England, Florida and the Mid- Atlantic states.
Rather than being stuck with expensive “jumbo” loans — with rates of one to two percent above standard — buyers will now be able to take out mortgages with lower rates, even if the loan amounts go to nearly $730,000.
Those new “budget-priced” jumbos will be available not only through Fannie Mae and Freddie Mac, whose lower capital costs get passed onto borrowers, but also through the FHA, whose capital costs are even lower.
There’s a hitch, though: These special jumbo deals will only be available this calendar year. They disappear December 31st.
Buyers and sellers who want to benefit from this part of the stimulus package need to get into the game fairly soon.
Who knows? Maybe the economic stimulus package — which most people think of in terms of tax rebate checks — just might bring some heat and energy to the housing market, just in time for Spring.
