Have homes reached the bottom yet?
Mortgage rates fell for three years, and home prices increased all over the country. Now that mortgage rates are adjusting and there isn’t enough equity to refinance people don’t know what to do. Prices have dropped in most places, sometimes between 40 to 60%.
In the long run, it’s impossible to predict whether the economy has bottomed out or not, but all signs are written on the wall. Even though there was some good news toady with the National Association of Realtors (NAR) that pending home sales rose 6.3% in April from the month before.
Yes, its good news that people appear to be buying homes again, but even the National Association of Realtors (NAR) admits they’re buying homes in the areas where prices have fallen the most. Moe houses are becoming affordable and good deals are available more and more.
However, prices are still in a downward spiral. The National Association of Realtors (NAR) actually revised down their projections on median home prices for 2008, from 2.4% drop last month to 6.4% drop now. A lot of the drop is due to the rise in foreclosures. Foreclosures that are becoming Short Sales and REO’s that are making their way the Multiple Listing Service (MLS) like never before, so they are being lumped in with the pricing data. The National Association of Realtors (NAR) recent survey from the Mortgage Bankers Association shows the delinquency numbers are not improving yet, but that they are still at record highs.
If prices continue to fall, and the economy loses more jobs. That means more people are getting cash-strapped on their mortgages, groceries, gas and just everyday living. If they want to sell their homes, they mat not be able to get enough to pay their existing loans. If they need to take cash out of their homes, the equity may not be there either.
So have homes reached the bottom yet? No, not until prices stop falling!