First, let's start from the economy in the Miami Beach of Florida. The economy isn't really that bad. At the height of the boom, many people thought the party could never end, a term economists call "irrational exuberance." Today, however, many people have "irrational pessimism," or a fear that things will continue to get worse. Those people were wrong before, and they're wrong now.
After months of punishing economic news, this week's rally of global stock markets seems to have lifted the mood, if only for a moment. However, many analysts warn that trying to forecast the end of the current recession is even more difficult because it hinges on how quickly and efficiently governments resolve the crisis in the financial system.
Here's the best thing about first quarter 2009: It's over. And there are hopeful signs, according to three market strategists, who note that the overall picture for key economic measures, while still weak, isn't as bad as before. "We're still in the basement, but we may be on the steps out of the basement," says Liz Ann Sonders, Charles Schwab & Co. chief investment strategist.
The Federal Reserve will decide on interest rates Wednesday. However, analysts do not expect any changes in the key rate, which policymakers have already dropped to a record low of zero to 0.25 points. Fed Chairman Ben Bernanke said in a recent interview he is optimistic that the financial markets will stabilize, paving the way for the recession to end "probably this year."
After the Obama Administration announced its $75 billion housing program, many homeowners had a simple question: "Do I qualify for a lower mortgage interest rate?" HOPE NOW, an alliance between HUD and others, announced a single application form that can be filled out online to find the answer and, if applicable, start the modification process.
After the Federal Reserve launched a new effort to assist the U.S. housing market, rates on 30-year mortgages fell this week to the lowest level on record, averaging 4.85 percent, according to Freddie Mac's weekly nationwide survey.
Bank of America Corp is seeking to produce more jumbo mortgages, which can range from $417,000 in most areas to as much as $729,750, according to Barbara Desoer, BofA's head of mortgage, home equity and insurance services. "Bank of America has balance-sheet capacity and we've allocated it to jumbos given our presence in some of the states and regions where that's important," Desoer said.
It's a double whammy: Homebuyers have a hard time qualifying for a mortgage and mortgage brokers have less time to help them. According to the Mortgage Bankers Association, refinancing accounted for 78.5 percent of all mortgage applications last week as rates hit an all-time low.
Florida's existing home sales rose 20 percent in February - the sixth consecutive month that sales activity showed increases in the year-to-year comparison, according to FAR. Statewide sales of existing condos increased 15 percent last month compared to the previous year; and February's statewide sales also were higher than January's figures in both the existing home and existing condo markets.
Pending home sales have edged up, hinting at a possible pickup of sales activity in coming months, according to NAR.
U.S. home prices rose 1.7 percent on a seasonally-adjusted basis from December to January, according to the Federal Housing Finance Agency, which regulates Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks.
New home sales rebounded unexpectedly last month, rising 4.7 percent, the U.S. Commerce Department reported this morning. Economists expected a drop.
Out of 1,000 potential first-time home buyers, 78 percent say that now is a good time to buy a home, despite widespread concern about the economy. And 68 percent think now is a better time to buy than six months ago.
There are signs that the housing market is starting to look healthier as many people realize it's a good time to buy a home. One of the best reasons: Uncle Sam is there to help first-time buyers, who are entitled to a maximum $8,000 tax credit on the purchase of their home.
HUD Secretary Shaun Donovan released a statement yesterday that suggests the housing market is improving. "This week we have seen some encouraging news on housing," Donovan's statement said. "Sales of both new and existing homes rose in February for the first time in more than six months, while home prices are starting to stabilize. Although there will be many ups and downs in the coming months, this news should reinforce the importance of the steps we have already taken to stabilize the housing market and strengthen our economy, including measures that have contributed to the nearly lowest mortgage rates in decades and the $8,000 tax credit for new homebuyers included in the American Recovery & Reinvestment Act (ARRA)." Donovan believes the housing turnaround will do more than help homebuyers, tying it to a complete economic rebound that will lead to growth and job creation.
Prepared by Ashton Coleman for his Miami Beach, Florida Real Estate Newsletter. You can visit Ashton at www.miamidreamrealty.com
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