Housing Nearing A Bottom?
- Chairman Bernake Thinks So
Last week, in regard to the real estate market, Federal Reserve Chairman Ben Bernanke said housing "has shown some signs of bottoming" after three years of decline.
"Although some of the boost to sales in the market for existing homes is likely coming from foreclosure-related transactions, the increased affordability of homes appears to be contributing more broadly to the steadying in the demand for housing," he said. This was welcome news to the real estate markets, as new home sales show a large up tick as well.
Chairman Bernanke noted the average rate for a 30-year fixed-rate mortgages has fallen nearly one and three quarters percentage points since August, and falling inventories is setting up for a recovery in housing starts.
In addition, the Fed chairman said the economy should bottom out and "turn up later this year," assuming that gradual repair of the financial system continues.
Chairman Bernanke noted that the U.S. economy has "contracted sharply" over the past half year, and that he sees "further sizable job losses" and a rising unemployment rate in the coming months.
However, he also stated that the U.S. economy could return to growth later this year, provided that improvements in the financial markets continue.
He noted that, "In coming months, households' spending power will be boosted by the fiscal stimulus program, and we have seen some improvement in consumer sentiment."
"Even after a recovery gets under way, the rate of growth of real economic activity is likely to remain below its longer-run potential for a while, implying that the current slack in resource utilization will increase further," he said. "We expect that the recovery will only gradually gain momentum and that economic slack will diminish slowly."
This was certainly an encouraging statement from one of the most powerful monetary policy figures in the world. Whether we are seeing a bottom or not is still a question to be answered. However, anecdotal and economic evidence we are certainly seeing an increase in home sales, coupled with low interest rates, which has only helped the housing market. We will see in the coming months if we can continue to sustain momentum and finally gain traction in the real estate market.
For more information on home purchase loan or refinace programs for existing and potential home owners, please contact Bill Kamboukos and Carlos Felix of Strategic Mortgage at (480) 219-3682 or by emailing: info@strategicmtgaz.com or online at www.strategicmtgaz.com
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