Housing Market Conditions

Gradual and uneven progress in the housing market continues without government support. The market has shown remarkable improvement from the initial drop after the expiration of the home buyer tax credit this past July. Although higher-than-normal distressed sales skew the overall picture of home prices downward, inventory remains at pretax credit expiration levels.

The rock-bottom interest rates of2010 are likely to trend upward. As economists anticipate rates at or above 6% by the end of 2012, buyers are moving off the sidelines and into the market.

Recent reports suggest the economy is picking up steam even though it is not yet fuly reflected in the job market. In terms of economic growth, America outpaces all the other G7 nations except Canada. However, when it comes to adding back jobs, America is the weakest. During the recession, businesses looked for ways to increase efficiency and productivity. U.S. productivity, or output per worker, doubled in both of the past two years. A ful housing recovery depends on growing employment. Without jobs, most Americans cannot buy new homes or afford their current ones. As the economy continues to pick up steam, employment wil likely folow suit as there is a limited amount of productivity workers can provide.

While the economy improves, stimulus efforts by the government and the Federal Reserve Board wil gradually wind down, which typically spurs rising interest rates. Meanwhile, buyers continue to benefit from historicaly favorable buying conditions and sellers are encouraged by increased market stability.

Home Sales

Although home sales have falen 9.6% compared to the previous month, they remain close to last year’s levels, showing only a 2.8% decline. The unseasonably cold weather across much of the country during late January and February could have kept buyers indoors more so than normal. Gradual improvement with bumps along the way has long been the anticipated road to full recovery. In fact, home sales remain 26.4% above the low last July. As Lawrence Yun, chief economist of the National Association ofRealtors, explains “month-to-month movements can be instructive, but in this uneven recovery, it’s important to look at the long-term performance.”

Home Price

Home prices continued to soften in January with median home prices decreasing to $156,100. This is 5.2% below the year-ago level and brings the median price close to February 2002 levels. Two out of every five homes sold during February, or 40% of sales, were distressed properties. Distressed sales often sell for 10%~20% less than traditional home sales. The decline in home prices is less reflective of the value of individual homes and more reflective of the bargains that a record level of al cash buyers and investors are snapping up. Prices and mortgage rates remain favorable for buyers as the spring selling season.

For Free information on what your home could sell for simply e-mail me at:

Frank@FrankLaMorteRealty.com or call 561-707-4900