Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.
Lawrence Yun, NAR vice president of research, notes that widening credit availability will help turn around home sales. “Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages,” he says.
Yun says it’s important to place the current housing market in perspective, and that 2007 will be the fifth highest year on record for existing-home sales.
“Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year — a lot of people are, in fact, buying homes,” he says. “One out of 16 American households is buying a home this year. The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains.”
Yun emphasizes that all real estate is local with naturally large variations within a given area. For example, markets such as Austin, Salt Lake City, and Raleigh have been outperforming recently and will continue to do well next year, Yun predicts. Also, other areas like Denver and Wichita, Kansas, will likely move up in the price growth rankings due to very positive local economic developments, he notes.
Housing Outlook
“Housing is still a good long-term investment, and we’ll be seeing a broad, modest improvement in home prices in 2008,” NAR President Pat V. Combs says.
Here’s what NAR predicts:
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