Just as the housing market is showing signs of stabilization, weaker consumer confidence and the possibility of higher mortgage rates could result in a bit of turbulence in the sector.
Prices in most major U.S. cities rose in September, though more slowly than in prior months, according to the Standard and Poor’s/Case-Shiller home-price index.
“The market’s clearly getting better,” said Jed Kolko, chief economist at Trulia Inc. “The housing recovery has not stopped or gone into reverse.”
According to Nick Sargen, chief investment officer at Fort Washington Investment Advisors, which has about $45 billion in assets under management, “This shows the housing sector is still moving along in the right direction and not rolling over. The sector is critical to the overall recovery story, so it is good to see some positive news.”
It’s not just the looming mortgage rate increases that are affecting affordability. National Association of Home Builders (NAHB) Chairman Rick Judson has said, “with markets across the country recovering, home values are strengthening at the same time that the cost of building homes is rising due to tightened supplies of building materials, developable lots and labor.”
In October, single-family permits rose modestly and reversed some of their summer decline. This is the segment considered to be a steadier gauge of the underlying health of the housing market. Stronger permits can signal builder optimism.
What does this mean to you? Well, if you are in the market to buy and trade up, sell to relocate or looking for investment property, now is the time. Mortgage rates are forecasted to increase very soon and availability of homes is remaining steady at the moment.
Your turnaround time now to have a mortgage processed will definitely be shorter than after new regulations take effect in January.
What I do know, as already mentioned by reputable lenders, is that the new laws are going to affect all homebuyers trying to obtain a mortgage.
One thing is certain — it’s not going to make things easier for anyone. As I’ve mentioned before, mortgage lenders are going to be held responsible to a much greater degree than in the past for all their loans, thus making it more difficult, especially for first-time buyers.
According to most reports I’ve recently read, many of today’s buyers are looking to hold on to their housing investment for the foreseeable future. The reasons for this are many:
Historically low interest rates that more than likely will not be seen again in our lifetime basically allow buyers to get “double the house” compared to what they could get several years ago.
The possibility of refinancing in the future probably won’t be an issue, as doing so would more than likely increase mortgage payments.
Buyers today want to plant roots in their communities, according to research from the National Association of Realtors.
While home prices won’t likely appreciate like they did during the housing boom, the slow appreciation will allow homeowners to see their home as building equity for a future nest egg.
The hard part of buying for the long haul is the ability to see “into the future” — anticipating what you might need in various stages of your life and the life of your family. That can involve many things, including school districts, proximity to public transportation or shopping, and much more.
An experienced Realtor can help answer questions you might have about most local areas and help you determine what’s exactly right for you and your lifestyle and/or family situation.
This can be invaluable whether or not you are looking to move to another neighborhood or looking for investment property. It is even more invaluable for first-time buyers, because as mentioned earlier, it’s going to be tougher for those folks to begin with.
Harry A. Salzman, a 40-year real estate broker, owns and operates Salzman Real Estate Services Ltd. Contact him at 598-3200 or at Harry@HarrySalzman.com for advice on what you can do before the end of 2013.