Optimism seems to be the mood of choice for home owners and potential buyers feeling that all signs point to a way out of the long-suffered housing slump.
In a recent column, Jed Kolko, the chief economist at Trulia, for Bloomberg detailed just how much home prices are rising. He points out that — even adjusting for seasonal patterns — all major home price indexes point to an upturn in prices. Trulia’s asking-price index went up at an annualized rate of 3.3% in the second quarter of 2012, and rose in 84 of the 100 largest metropolitan areas. Trulia said 61% of people surveyed expect prices to continue to rise. While this is cause for relief, Kolko points out it could be fleating — European economic issues may slow us down. But a tightening inventory could give a boost to home prices, he notes.
The Federal Housing Finance Agency and the Federal Housing Administration are expected to announce guidance in the coming weeks that urges banks to loosen credit standards on government-backed mortgages, the Los Angeles Times reported. Mortgage lenders are adding underwriting requirements and program restrictions to avoid buyback claims, the article said.
Fannie Mae and Freddie Mac accept FICO credit scores of 660 to 680 while private lenders may demand scores 100 points higher. Private institutions, driven by uncertainty and overcorrection, are slowing up the market. “Since the two top agencies are trying to figure how to do this, homebuyers might see slightly less punitive "overlay" fees and underwriting later in the year,” the column said.
In our area specifically, foreclosure resales fell to 21.2% of total sales in Phoenix, the lowest percentage since January 2008, helping to push prices up for the 17th month in a row, reported DataQuick. The large gains in the median sale price recently reflect increased pressure on home prices as low mortgage rates pushed up demand at the same time as inventory is dropping. Sales of newly built homes have been on a recent upswing, rising year-over-year for 12 consecutive months. June new-home sales rose 31.2% from a year ago.
Real estate agents feel the trend behind the strong market include growing confidence in the economy, pent-up demand by potential buyers and rock bottom interest rates. Mortgage rates, already at historically low levels, have fallen by a full percentage point over the past year, to less than 3.7 percent for a 30-year mortgage.
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