Is the US Housing Market Stabilizing?
Home used to be home sweet home but that has not been the case for a while in the US housing market. The latest housing market analysis reports show that mortgage rates are at an all time low.
Record low mortgage rates
The average rate for 30-year mortgages slid further down to reach a record low of 3.62 percent* for the week ending the first week of July. This is a sharp contrast to the fixed 4.6 percent interest rate of one year ago.
Slow economy, low yields
The sharp decline has been attributed to consumers spending less and manufacturers producing less in response to reduced product demand. These two factors have affected the Treasury Bill. Long-term Treasury Bond yields have dropped in this period, bringing down fixed mortgage rates to record lows.
Mortgage rates are directly affected by the Treasury Bill as they take the direction that the Bill takes. Bills have been on the decline as an increasing number of investors have opted for government bonds in a bid to cushion themselves from possible losses arising from slowed global economic growth especially in Europe and China that were thriving and playing a major role in holding the global market steady.
Another trend reported in recent housing market analysis reports is an increase in rental rates which is another reason consumers are spending conservatively. Trulia's Rent Monitor indicates that rent have gone up by 5 percent nationally in the month of June, 2012. The rise has been seen year over year in 24 of the 25 largest rental markets.
Opting to buy
There are a number of implications of this. For one, when rents are going up at a rate that is faster than that of house prices, buying becomes the more affordable option. When people do the math and realize that they would be better off paying off a mortgage than rent that keeps rising, they will opt to buy. This will in turn raise the demand for houses to buy.
In fact, it seems that the falling house prices finally hit the floor and are now rising throughout the country. They are not going up by much but asking prices, which are the top indicator of sales prices, went up by 0.3 percent in June, 2012 according to Trulia's Price Monitor. This is the fourth solid increase over the last five months. While the increase seems minor, it will add up to a 3 or 4 percent increase over the year.
Statistics are also dependent on location. In some metro areas, asking prices are shooting up by double digits with areas like Miami, Phoenix and parts of Florida like Cape Coral seeing increases of up to 15 percent in recent months.
Higher demand, higher asking prices
Going by recent housing market analysis reports, now would be a good time to make the decision to buy. As more people opt to buy rather then pay higher and higher rent, the competition for turnkey houses that are ready for immediate occupation will be higher and that will see asking prices go up and perhaps by rates higher than the current marginal monthly rate of 0.3 percent.
It has also been established in the latest housing market research reports that there are inventory shortages in the market resulting in multiple bids on ideally located houses which is also contributing to increasing asking prices.
Several indications point to a stabilizing market. That means now is the time to make a move and buy while mortgage rates are low and before growing demand for ready housing drives asking prices higher.
As you get ready to make that move, download our free eBook "The Essential Guide to Buying Your First Home." This guide is great for first time home buyers as well as first-time-in-a-long-time buyers. From FICO scores to today's down payment requirements, it's all in there.
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*This rate is not a quote. It's an example of the rates Fannie Mae and Freddie Mac offer as a national rate. Talk to a mortgage consultant about actual rates, including the APR.