The Federal Reserve announced that it would continue its accommodative monetary policy as long as inflation is in check and the unemployment rate is above 6.5%. What this means for the housing market is that mortgage rates will remain extremely low through 2013. The President of Minneapolis Fed believes that the target for the unemployment rate should be further down to 5.5%.
The Builder Confidence as indicated by NAHB/Wells Fargo Housing Market Index remains steady at 47 in January for newly built single-family homes. NAHB predicts the housing starts will rise above 20% in 2013.
CoreLogic Market Pulse report highlights increased home prices and reduced delinquencies through 2012 with a prediction that the housing market is poised for a recovery in 2013. The company’s Home Price Index representing nationwide prices in November 2012 increased by 7.4% on a year-over-year basis which is the biggest increase since May 2006. There is further positive news from the research firm: More than 1.3 million borrowers moved into positive equity through the second quarter of 2012. Home Sales at $0-100,000 and $200,000+ show improvement with a steady rate for the properties in $100,000-200,000 range.
There have been concerns about inventory on the market. RealtyTrac reported that a total 1.8 million properties filed for foreclosure in 2012. The number is 3% down compared to last year and 36% down compared to 2010 when foreclosures were at their peak. However, a normal level of filings should be around 532,000 properties, the level in year 2005. There are 25 judicial and 25 non-judicial states handling foreclosures and inventory from the 25 judicial states are expected to increase by the year-end with the process just taking a longer time. On average, it is currently taking 414 days to complete a foreclosure process.
Consumer Financial Protection Bureau issued the final rule that the lender must provide mortgage applicants with free copies of all appraisals and other property-value estimates before closing the loan. From January 2014, the practice of the lenders charging for an appraisal and not sharing the results unless requested will change.
Freddie Mac weekly fixed averages for 30 years and 15 years remain steady at 3.38% and 2.66%.
There is the right timing for any investment to reap maximum benefits, and all economic measures indicate that it is ‘now’ for real estate investment.