The three main factors most commonly prescribed too are 1) the Fed will stop buying mortgage-backed securities that keeps interest rates low 2) the $8,000 tax credit will end and 3) foreclosure inventory will be increasing.
1) Since 2008 and through March 2010, the Federal Reserve will have purchased $1.25 trillion in mortgage-backed securities. This is 70% of all securities conforming to Fannie Mae and Freddie Mac. Since this is due to expire in March the fear is, interest rates will increase an estimated 1% stalling home sales. However, in the last two weeks Congress announced they are giving both FNMA and FHMLC unlimited spending caps for the next three years to purchase mortgage-backed securities. This will replace what the Feds will be ending.
2) There was a surge of first time homebuyers in the 2nd and 3rd quarter of 2009 wanting to get in before the tax credit expired. Congress didn't want to extend the credit and stated most buyers who benefited, had already taken advantage of the credit and purchased a home. Under pressure from all industry groups in the housing industry the extension was made until the end of April. However, the tax credit is no longer the driving force for most buyers. The historically high affordability index is now the primary reason.
3) There is a shadow inventory of foreclosed homes reportedly about ready to be dumped on the market. 1 in 7 homeowners are in foreclosure or delinquent. 1 in 4 homeowners owe more than their home is worth. However, the Obama administration continues to pressure the banks to keep people in their homes through loan modifications and other remedies. The daunting short sale process has decreased in time frame all the while the amount of short sales has doubled. Banks are beginning to deploy internet portals for homeowners and realtors to track status and exchange documents on short sales. FNMA and FHLMC are now leasing back to homeowners who were foreclosed upon. The government is using every initiative to prevent the housing inventory from increasing.
In looking back to the 2nd half of 2008 it seemed things could not have gotten any worse with the financial meltdown. The 1st half of 2009 the homebuyers acted in trepidation with the market made up of primarily first time homebuyers. The 2nd half of 2009 home prices posted 7 consecutive months of price gains. Though still fragile the overall market has stabilized. With the amount of money still waiting to come into the housing market all it will take is for confidence to return and things could improve quickly. Here's to hoping that in real estate the naysayers are wrong and to a much better 2010 for the housing industry.
Tim Lorenz
Instant MLS Listings & Free Market Analysis
"We have actually closed many short sales!"
949-282-2521
Tim Lorenz . Over 40 Years Experience Representing South Orange County Home Buyers, Sellers, Investors and Relocations!
No comments:
Post a Comment
http://www.markandtim.com