The Housing Market Hits the Bottom

Ande Allen's picture

According to Real Estate Professionals and most of the major indices, the beleaguered housing market has finally hit the bottom or is only weeks away from being at the bottom of the market.

The mood in the Real Estate Industry seems to be on an uptrend. A recent survey conducted by HomeGain.com showed that almost half of Real Estate Agents who took part in the survey expect home prices to stop falling and begin increasing in the next six months. The majority of these Agents (85 percent) said that the homes in their areas had dropped in value in the last twelve months. However, the last couple of months they have definitely seen an increase in activity and sales.

Distressed Real Estate entrepreneur – Sam Zell – agrees with the survey. He is forecasting that the housing market will bottom out this summer because the drop in building is starting to impact supply. Zell recently said that “the U.S. will recover and recover first around the world because we have a culture and we have an environment where we face up to reality quickly and effectively.”

The indices have been trending more positive as well. The National Association of Home Builders/Wells Fargo Bank said that housing affordability reached as high as 97 percent in some areas. In addition, 73 percent of all homes sold in the first quarter this year were considered affordable. An affordable home is one in which a family making a median income of $64,000 will pay a maximum of 28 percent toward their housing costs.

The five most affordable cities to own a home are Sandusky, OH; Monroe, MI; Mansfield, OH; Springfield, OH; and Canton-Massillon, OH – all at 95 percent or higher. The five least affordable cities are New York, NY; Ocean City, NJ; San Francisco, CA; San Luis Obispo-Paso Robles, CA; and Honolulu, HI – all at less than 42 percent home affordability.

Housing inventories are beginning to decline as well. With fewer foreclosures coming on the market, less new homes being built and more buyers able to afford a home, the existing home inventory that has built up over the past few years is quickly being depleted. The foreclosures that are coming on the market are being priced lower. This coupled with the low interest rates available is spurring buying.

While the new home market optimism is good, there are still some outstanding issues that may have a negative impact on the future of the housing market. The Obama administration’s Foreclosure Prevention plan has been hindered by problems and glitches. Instead of helping millions of people so far, only around 55,000 distressed homeowners have taken advantage of the program.

One the biggest issue out there is the current and rising unemployment rate. Without a job, borrowers can’t afford their mortgages, qualify for home loan modifications programs, or purchase new homes. It remains to be seen how this will impact the market.

Written by Andee Allen. She is freelance writer, Strategic Media Coach/Consultant, Real Estate Investor, and California Realtor (License #01854926). You are welcome to contact Andee at andeeallen@gmail.com or on her website at www.strategicmediacoach.com.

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