Posted by: Larry Stevens | March 30, 2010

Idaho Home Sales Are Up!

With prices and mortgage rates at all time historic lows there has never been a better time to buy homes in Idaho than right now! The real estate market in Idaho and across the nation is looking up and now is the time to start making the most of this unique market! Invest in Idaho real estate by purchasing a home in Boise or the Treasure Valley – with the real estate market turn around in full flow this is the time to buy! Whether you are looking for homes in Boise, or homes in the Treasure Valley I can help – now on to the latest real estate news…

March 2010 — The U.S. housing market is poised to not only withstand the removal of government and Federal Reserve stimulus programs but also rebound later in the year, signaling the first annual economic growth since 2006.

An increases in jobs, credit and affordable homes will help offset the end of the Federal government’s purchases of mortgage-backed securities and the expiration of a federal homebuyer tax credit in April.

According to estimates sales will rise about 6 percent this year, the housing market accounting for 0.25 percentage point of the 3.6 percent growth.

“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts.

Improving markets would put at rest concerns that sales will relapse after the tax credit expires. It would also give Fed Chairman Ben S. Bernanke and his colleagues a more free rein to raise the interest rate for overnight loans among banks from near zero.

“They’re going to be tightening credit sooner than people expect,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. He forecasts that the Fed’s first increase since 2006 may come as soon as June.

More than Optimism ?

Recent housing data has been mixed. Sales of existing homes fell 7.2 percent in January, while housing starts rose 2.8 percent, according to statistics from the National Association of Realtors in Chicago and the Commerce Department in Washington. Builder confidence declined unexpectedly this month to 15 from 17 in February according to a National Association of Home Builders/Well Fargo index, as traffic of prospective buyers dropped to a one-year low. A reading below 50 means most respondents view conditions as poor.

Sales are up!

Sales of new homes are still forecast to increase this year as the economy improves, according to David Crowe, chief economist for the association in Washington, probably totaling 459,000 in 2010, up from 372,000 last year, he said.

“When people get jobs, that’s when they move or decide to buy a bigger house,” ,according to Patrick Newport, an economist with IHS Global Insight in Lexington, Massachusetts. Employment is key to the outlook and recovery.

Solid Footing

The Senate last week approved a $138 billion measure that would extend unemployment benefits and provide additional aid to states. President Barack Obama praised the bill’s passage, saying it will help put the U.S. back on a solid footing.

Credit conditions may also be improving. A net 13.2 percent of banks surveyed by the Fed in January reported that they tightened standards on prime mortgage loans in the fourth quarter, the smallest percentage since the central bank began tallying such data three years ago.

“This is an important step in the right direction,” Peter Hooper, chief economist at Deutsche Bank Securities in New York.

Homes have NEVER been More Affordable

Falling home prices in Idaho and across the country as well as low mortgage rates have made homes more affordable. The median price was $164,700 in January, matching the year-ago level, which was the lowest since May 2002, according to the Realtors’ association.

The average rate for a 30-year fixed mortgage was 4.95 percent last week, up from a record-low 4.71 percent in December, according to Freddie Mac, the McLean, Virginia-based mortgage buyer.

The average household had 177.8 percent of the income needed to purchase a property in January, the highest since a record 184 percent in April 2009, when mortgage rates tumbled to 4.78 percent, according to data from the Realtors’ association.

The housing market’s first hurdle comes at the end of this month, when the Fed completes its program to purchase $1.25 trillion of mortgage-backed securities and about $175 billion of housing-agency debt.

The move probably won’t have much impact as private demand will replace the central bank, keeping down the spread at which mortgage-backed securities trade to 10-year Treasury notes.

The Next Obstacle

Once the Fed completes its purchases, the next obstacle for the market is the expiration of the tax credit for first-time home buyers. The original credit helped boost existing-home sales by 4.9 percent to 5.16 million in 2009, the first increase since 2005, according to the Realtors’ association. The credit, which was slated to end on Nov. 30, was expanded and extended through April.

The Fed’s Beige Book business survey released March 3 found that some contacts in the housing industry are “apprehensive about future sales” of homes once the credit expires, even though the extension hasn’t helped as much as the initial incentive.

The credit of as much as $8,000 stimulated only 180,000 extra sales from December to April, said Crowe of the home- builders’ association.

Positively Positive

The final challenge for the housing market this year is the supply of available properties and the prospect that it may rise. Foreclosures may increase to 2.2 million this year from a record 1.7 million last year, according to a forecast by Mark Zandi, chief economist for Moody’s in West Chester, Pennsylvania.

The number of vacant homes for sale rose to 2.09 million in the fourth quarter from 1.99 million in the prior period as banks seized property, the U.S. Census Bureau said Feb. 2.

An improvement in the job market would spur household formation and help absorb the excess supply, said Thomas Lawler, a former economist with Washington-based mortgage company Fannie Mae who now is an
independent housing consultant in Leesburg, Virginia.

AA Realtors Boise provides the best homes in Boise and throughout Idaho – we can help you buy a new home in Idaho or sell your current home. Visit our Boise Idaho Realtor website to search for homes and property, learn about the area, get your homes value and more!

credits to Kathleen M. Howley and Rich Miller

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