The Stanley Cup ended last week, but the industry is talking about a possible hockey stick recovery for housing if builders can’t “meet pent-up demand once excess inventories are depleted.” The sentiment is joined by analysts who believe that a housing shortage could be on its way as the job market rebounds and people look to buy homes again. In the meantime, however, housing starts sagged 10 percent in May and building permits fell to a one-year low.
Trulia.com reports that last month, sellers lowered asking prices on 22 percent of homes, totaling $26.7 billion. There may be many reasons why, but clearly the role of the real estate professional in pricing a home is growing evermore vital in a changing market. This will only increase in the years to come as the Mortgage Bankers Association this week gave buyers and sellers another reason to move with a sense of urgency, saying they believe thirty-year fixed-rate mortgages will creep up to the high six percent range over the next two years.
In good news/bad news reports, the “State of the Nation’s Housing” study from Harvard University’s Joint Center for Housing Studies predicts household growth could approach 15 million from 2010 to 2020, thanks to the emergence of the echo-boom and baby-bust generations, if employment picks up. However, the US Labor Department reported only 41,000 private sector jobs last month, this is only one-fifth of the April number.
In other news from Washington, in what has been dubbed the “the mother of all bailouts,” Fannie and Freddie have been de-listed from the NYSE. These government sponsored enterprises, which own or guarantee almost 31 million home loans, will need at least $160 billion to be fixed and can spiral up to $1 trillion. Even the “low end” of this estimate surpasses the amount spent on bailouts of American International Group, General Motors or Citigroup.
Lastly, if you have homebuyers considering a fixer-upper with limited funds to remodel it, look into the FHA 203(k) Loan. A variety of home repairs, from painting to room additions to kitchen remodeling, can all be financed with the loan.
To all dads, Happy Father’s Day!