Buyers Emerging
Monday, January 11th, 2010Unemployment and the abnormally high foreclosure rate continue to weigh heavily on a full-scale housing recovery, but there are signs of hope. According to Lawrence Yun, chief economist of the National Association of Realtors, pending sales increased for the ninth consecutive month ion November.
Yun credits more determined short sale lenders, low interest rates and the extension of the 2009 Homebuyer Tax Credit with contributing factors. The expansion of the tax credit bill to existing homeowners should spark even more sales. Existing homeowners are still reluctant to carry two mortgages, but existing homeowners are helping to clear some of the abundant upscale housing inventory.
Yun also points to the availability of more qualified renters who are anxious to turn rent into equity and tax deductions. Yun asserts that these buyers have been on the sidelines, waiting to find the bottom of the market. The reality that they can now acquire more space than in the past ten years is certainly motivating a new wave of prospective purchasers. With 15-year interest rates at the lowest rate since 1970, buyers are gaining confidence that the time is right.
Meanwhile, newly constructed home sales jumped by 6.2 % in November. For existing sales, the northeast still remains the most stable area. November existing sales increase by 20% in year over year comparisons. The Midwest rose by 12 % and the south surprised with a 6% increase. Only the west showed a November decline of 5%.
To add hope to a muddled picture, November layoffs decreased to 50,000 compared to 182,000 in November 2008. With the Obama Administration aggressively tackling unemployment and willing to pump billions into employment initiatives, housing may begin to emerge in the spring of 2010. That makes this a great time for investors to buy low with the idea of selling high in a relatively short time.
