REFLECT AND LOOK AHEAD
While many buyers have taken advantage of the current home buying opportunities, the national market and our local market have faced challenges. In the first half of the year the first time home buyer tax credit and repeat buyer tax credit encouraged sales both nationally and here in Hattiesburg. The National Association of Realtors Chief Economist Lawrence Yun recently pointed out that home sales picked up right before the home buyer tax credit expired, only to drop 27 percent in July. However, in August they picked back up without the aid of incentives like the tax credit.
Buyers also benefited this year from a greater buying power. Better affordability and low interest rates have put buyers in a better position to buy than we have seen in years. “Low interest rates mean real money for today’s home buyers,” said The National Association of Realtors President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “Buyers who purchased a median-priced home five years ago with an FHA mortgage requiring a 3 percent down payment would have a monthly payment of $1,650. With today’s interest rates and median home prices, that same buyer would pay $1,150 per month – a $500 savings. That’s a savings of $6,000 per year.”
Even with all the buyer incentives available rising foreclosure rates led some Americans to wonder if owning a home was a wise decision. There are many reasons for the rise in foreclosures, like irresponsible lending practices. However, home ownership is not the enemy. There are many factors that benefit home ownership, as Phipps pointed out, “…owning a home is one of the best ways to build long term wealth, in addition to providing numerous social benefits that include reduced crime rates, improved childhood education, and increased stability. After all, a fixed rate mortgage might last 15 to 30 years; renting is forever.”
Bankrate.com conducted a survey early in the year and found that 90 percent of respondents had no regrets about buying their current home. Fannie May conducted a survey this month that found that the majority of Americans, both renters and current home owners, strongly aspired to own a home and maintain home ownership.
With all the ups and downs we have experienced in 2010, what should we be expecting from the 2011 market?
“There will be two steps forward, one step back, with sizable local market differences,” says NAR Chief Economist Lawrence Yun,” but the trend nevertheless will be a rise in home sale activity in the upcoming years.” Yun sat down with Robert Freedman, Realtor Magazine, this month. Yun has predicted a slow, but steady recovery for the housing market beginning in 2011. It may take a few years, but will eventually lead us back to normalcy. Yun is predicting 5.2 million existing-home sales, up from 4.8 million last year. He is also forecasting a small improvement in prices—a rise of about 1 percent this year on a national basis.