The Worst May be Over For Residential Real Estate

According to a recent Wall Street Journal news article April 2008 may mark the bottom of the housing market. Their analysis is based on reviewing variances from the standard debt service coverage ratio of 28% lenders use to qualify mortgage prospects.

In the 1990's it took an average of 19% of our gross monthly income to make the monthly PITI payment on a typical mortgage.  By 2005 it ballooned to 25% for refinance & 37% for 1^st time homebuyers. It's easy to see why exotic lending programs became increasingly popular!

With home values falling nationally, average household income rising and mortgages rates at (relative) lows, average front end debt ratios have dropped back to 19% for refinance & 31% for 1^st time homebuyers meaning homes are considered "affordable" again.

Affordable home values reduce pressure for further reductions to housing values allowing the real estate market to grow. Those waiting for the market to reach bottom may want to buy now. Contact Greg for a copy of this news article.

www.GregZaccagni.com & www.MortgageAdvisor.info