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2012 Housing Market Outlook & Forecast Report
By RE/MAX of New England – Last updated: Wednesday, January 18, 2012
Employment, Consumer Confidence Needed to Grow Housing Market in 2012
“New Normal” Has Arrived for Buyers, Sellers
Historically low interest rates, renewed interest by investors, and job growth helped provide modest stability to the real estate market in 2011, according to RE/MAX of New England. Although the first six months of 2011 failed to keep pace with the first six months of 2010, fueled largely by the pending expiration of the federal tax credit, the second half of 2011 witnessed much stronger sales.
Federal Reserve Chairman Ben Bernanke, in a report to Congress, recently declared the weakness in the real estate market a “significant barrier” to a meaningful economic recovery. The Federal Reserve, as part of an effort to bring stability to the real estate market and the overall economy, has pledged to keep key interest rates at historically low levels until mid-2013. There is hope in the real estate community that this will help solidify consumer confidence, which remains low, and, with interest rates now in the 3% range, entice more people to purchase homes.
“There is no indication that leads me to believe we will have any significant uptick in the market,” said Jay Hummer, Executive Vice President and Regional Director of RE/MAX of New England. “However, barring a financial catastrophe in the marketplace, it appears that we’ve hit the bottom, and we can expect to see a very slow and very gradual increase over the next couple of years.”
Home values continued to slip in 2011. Just one out of six New England states, Vermont, experienced an increase in sales price. However, home prices in New England declined at a slower rate than other parts of the country. According to the Clear Capital Home Data Index, U.S. home sales prices declined by -2.1%, marking the fifth consecutive year that home values have decreased. Four New England states outpaced this national trend by experiencing smaller declines. “The housing market was fairly similar to the market in 2009. There was a decrease in units, volume, and pricing in most segments,” Hummer said.
To read the entire report, click here.
Rate on 30-year mortgage down to record 3.88 pct.
WASHINGTON (AP) — The average rate on the 30-year fixed mortgage fell again this week to a record low. The eighth record low in a year is attracting few takers because most who can afford to buy or refinance have already done so.
Mortgage buyer Freddie Mac said Thursday that the average rate on the 30-year fixed mortgage dipped to 3.88 percent this week, down from the old record of 3.89 percent one week ago.
The average on the 15-year fixed mortgage ticked up to 3.17 percent from 3.16 percent, which was also a record low. Records for mortgage rates date back to the 1950s.
Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.
For the past three months, the 30-year fixed mortgage rate has hovered near 4 percent. Yet cheap rates on the most popular mortgage option have done little to boost home sales.
High unemployment and scant wage gains have made it harder for many people to qualify for loans. Many don’t want to sink money into a home that they fear could lose value over the next few years.
Previously occupied homes are selling just slightly ahead of 2010′s dismal pace. New-home sales in 2011 will almost certainly be the worst on records going back half a century.
Builders are hopeful that the low rates could boost sales next year. Low mortgage rates were cited as a key reason the National Association of Home Builders survey of builder sentiment rose strongly in December and January.
So far, the low rates have had minimal impact. Mortgage applications have risen about 6 percent on a seasonally adjusted basis over the past four weeks, according to the Mortgage Bankers Association. But they are coming off extremely low levels.
To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.
The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.
The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.
For the five-year adjustable loan, the average rate was unchanged at 2.82 percent. The average on the one-year adjustable loan fell to 2.74 percent from 2.76 percent.
The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable-rate loan was unchanged at 0.6.
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Property Value Poll
Has anyone found and/or preformed any studies on the relationship of decreased property values when a city/town has dramatically decreased the school budget?