With a positive view, we know real estate is still relatively affordable, consumer spending is trending in the right direction, real disposable income is on the rise, consumer confidence is at a three-month high, new-home construction is low, and home sales are improving. These are all optimistic factors that influence supply-and-demand and generally push prices up.
However, it is more likely that foreclosures and the demise of government funding will put a damper on these positive factors, further hindering the real estate markets.
According to NAR (National Assoc. of Realtors), there are more than two-million homes currently in the foreclosure process, with an additional million or two likely to follow in the coming months. With this in mind, banks are likely to flood the market with these homes, pushing inventory levels up and producing more than ample supply. Idaho Short Sales are a very viable option for investors right now!
As for the government, the Fed is likely to increase the federal funds rate and exit the mortgage-backed securities program in the first half of 2010, which is expected to result in a significant increase in mortgage rates. Many suggest that the Fed's purchase of mortgage-backed securities is one of the major driving forces propping up the real estate market. Additionally, the recently-extended first-time homebuyer tax credit is set to expire early this year and further take away an incentive to purchase a new home.
In a nutshell, while the national real estate market is much healthier than last year and is trending in the right direction, factors suggest that prices will likely decline before seeing any significant increases.
For Idaho Real Estate and the Nampa homes market, we have been experiencing the bottom of the market in some price ranges. Prices are driven by supply and demand. The demand for homes in Nampa, for instance, is not very high in the price range above $300,000. Therefore, those homes have experienced larger price reductions than homes near the $100,000 price.
Competition is afoot for homes in the $80,000 - $125,000 price range. If you are thinking of buying a home in this category, don't hesitate. Those who snooze, lose!