I just received this article from Rod Shuster, a Mortgage Broker at Clarion Mortgage Capital, and I think it bears repeating – some sunny news about the market!
A funny thing happened on the way to the depression: A recovery occurred. Over the past two weeks, the two major stock-market barometers – the Dow Jones Industrial Average and the S&P 500 Index – have surged nearly 20%. The good news embedded in the surge is that the stock market is one of the more reliable indicators on the likely direction of the economy.
There are a number of reasons investors are feeling more upbeat these days, none more important than the improving housing market. Last week, the National Association of Realtors reported that sales unexpectedly increased 5.1% to an annual rate of 4.72 million in February, as foreclosures pushed down prices and lured first-time buyers into the market.
Lower prices are also driving new-home sales, which rose 4.7% last month to a 337,000 annual rate. Homebuilders have been aggressively discounting, with the median sales price for a new home falling to $200,900 from $251,000 in February 2008. But it's worth noting that the median price for a new home is still high compared with the median sales price of $165,400 for an existing home.
Lower mortgage rates are an important factor in the nascent housing-market recovery. In fact, rates aren't just lower they are the lowest they've been since Dwight D. Eisenhower was president. According to the National Bureau of Economic Research, the average rate on a 30-year, fixed-rate FHA-insured mortgage was 5.15% in December 1956. That's about where we are today, and depending on credit scores, income levels, and debt ratios, many borrowers are getting mortgage rates below 5%.
The return of the mortgage-asset market is another sign sunny days might be just over the horizon. It didn't receive much press coverage last week, but both Citigroup and Bank of America have been aggressively buying AAA-rated mortgage-backed securities, including some that use alt-A and option adjustable-rate mortgages as collateral. Citigroup and Bank of America obviously believe these assets are a good investment, which means many other investors are likely thinking the same thing, and that could be very good news for the credit markets. Rising mortgage asset prices will further bolster banks' balance sheets, enabling them to turn up the lending spigot.
For answers to your real estate questions, call Allison at 970-468-6800. Email - [email protected]. Allison is a long time local in Summit County. Summit Real Estate – The Simson/Nenninger Team is located at the Dillon Ridge Marketplace. Allison’s long-time residency and years of real estate experience can help you make the most of any buying or selling situation. She’s a Certified Residential Specialist (CRS), the highest designation awarded to a Realtor in the residential sales field. Her philosophy is simple, whether buying or selling, she understands that the most important real estate transaction is yours. Want to know the value of your Summit County property? Visit www.SummitHomeValue.com