Affordability, Low Rates & Desire to Buy – Hope for the Housing Market

Housing affordability now stands at its best level since 1971. This greater affordability is helping boost home sales.

First-time home buyers are  responsible for up to 50% of new home purchases. The $8,000 tax credit helped move many of these first-time buyers out of their rentals and into their own homes.

The U.S. government and Federal Reserve remain proactive in their attempts to stabilize the housing market and keep interest rates low. While economists expect continued softness in the overall housing market, encouraging buyer signs abound given the historically low mortgage rates and the availability of distressed properties.

There are many opportunities for savvy investors and for those buyers who are qualified, willing, and ready to buy on the cheap. The question for many borrowers becomes, how long will the good times last?

The Fed's actions and mounting federal deficits could weaken the dollar and spur the aforementioned inflationary trend, which could send interest rates back up. In addition, the first-time home buyer tax credit expires at the end of November. Prominent economists maintain that low rates should be available for "at least the next several months."

But inflation fears could lead to increased interest rates for mortgages. Some estimates show 23% Americans expect to buy a home in the next five years. 

According to NAR President Charles McMillan, “With the drop in interest rates, a median-income family can afford a home costing $20,000 more than a year ago for the same monthly mortgage payment.”

Our FREE In-Depth Real Estate Market Reports updated weekly, break data down by zip code and price point. 

Contact Craig for more info on local real estate trends – 925-984-4910