How’s the Local Housing Market?

By: Bob Sallee

Published: July 30, 2919

It seems like every day there’s another article on the U.S. housing market.  Mortgage interest rates hit historic low (for those who qualify).  Foreclosures may have hit a peak.  Building slump worsens (depending on home type) as federal homebuyer incentives end.

What’s really of interest is where the local housing market is, and where it’s heading in the Pikes Peak region.  People want to know how the local market is doing in terms of home construction, financing and sales.

What the housing market is doing now may not reflect where it will be in one, three or six months.  But trends do help us to gauge our expectations.

Let’s look at mortgage rates, which are at 50-year lows nationwide, according to Alan Zibel of The Associated Press [USA Today, p. 3B, June 25, 2010:]

Zibel says rates are at the lowest point since the 1950s, but “almost no one expects falling rates to energize the economy.”

“As long as prospective home buyers are still concerned about their jobs and financial well-being, many will be reluctant to take the plunge, even though affordability has never been better,’ says Greg McBride, senior financial analyst at Bankrate.com.” Zibel reports.

For the Pikes Peak Region, we can expect a tougher housing market for the second half of the year, according to Rich Laden [as reported on page BUSINESS 4 in The Gazette, July 25, 2010.]

This is because the federal government ended its homebuyer tax credits [except for military members returning from overseas deployments], Laden says.

He also provides some good news:

-    Home sales and building permits increased by double digits for the first half of 2010 compared to the same period in 2009.
-    Foreclosures in the Pikes Peak Region fell 10% for the same period.

On the down side, he reports:

-    Foreclosures create distressed property sales which have lowered appraised values below purchase prices/mortgage balances, discouraging sales listings.
-    Declining household incomes have prevented many homeowners from qualifying to refinance their current homes.

He concludes:

-    It’s a buyer’s market: house prices, while recovering, are still below prices of a few years ago.
-    Low interest rates are still attracting buyers.
-    Lenders are more diligent about qualifying potential buyers, reducing the number who qualify for new loans, but… the market always comes back”

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