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Is it Darkest Before Dawn?

Okay, we’re all very aware of the trials and tribulations in the housing and mortgage markets beginning in 2006.  It’s been a long road, with new bad news almost every step of the way.  Bright spots, like the surge of home buying this Spring have been created with government help and tax credits.  But, like coming down off a caffeine high, shoving a lot of buyers into a small time space has created a dramatic drop in activity post-credits.

While the Mortgage Bankers Association reported refinancings surging to 8 month highs due to low interest rates, new mortgages for homes reached a 13 year low in June.  This deflation has been rapid, following the expiration of the home buyer tax credits, and the association reports that home buying will suffer as long as unemployment stays near 10 percent.  Foreclosures continue, keeping the inventory of depressed-price homes high.  And, waiting sellers monitor markets for the best time to jump in and list their homes.  There’s some pent up selling pressure yet to surface when markets show improvement.

If you’re a waiting buyer, consider the old saying “It’s always darkest just before dawn.”  Right now, home prices are averaging around 30% less than they were four years ago.  Thirty year fixed rate loans are flirting with the low of 4.61 percent set in March 2009.  Some analysts believe that the worst is over, with the likely result of stagnant home prices for the next few years.  And, that’s a prediction of “average” prices, not reflective of areas already rebounding.  It just might be the right time to watch for your perfect home.

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