Thursday, March 29, 2012

Houses Crisis will end this year

By most indicators, especially the local ones, the housing market is stabilizing and lining up where it should, had there not been a bubble.
Although many homeowners saw a marked depreciation in the value of the homes in the last several years, it was relative.
The bubble that encouraged super-high prices was just that, an ailment, a weak spot in the hose where the rubber bulged before it burst.
The fix included getting the hose back to where it was before the bubble and here we are, according to researchers.
The latest market studies indicate home prices are about where they were back in 2002.
Home sales in Idaho's Panhandle have been relatively good, with buyer's taking advantage of solid prices.
According to a recent report by the default service industry, the housing market will begin to stabilize this year. That means it will get stronger. It will take a while for prices to go up as the stabilization sets in.

Here's the story by DSNews:

Capital Economics expects the housing crisis to end this year, according to a report released Tuesday. One of the reasons: loosening credit.
The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.
Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.
However, other market indicators point not just to a stabilization of mortgage lending standards, but also a loosening of credit availability.
Banks are now lending amounts up to 3.5 times borrower earnings. This is up from a low during the crisis of 3.2 times borrower earnings.
Banks are also loosening loan-to-value ratios (LTV), which Capital Economics denotes “the clearest sign yet of an improvement in mortgage credit conditions.”
In contrast to a low of 74 percent reached in mid-2010, banks are now lending at 82 percent LTV.
While credit conditions may have loosened slightly, some potential homebuyers are still struggling with credit requirements. In fact, Capital Economics points out that in November 8 percent of contract cancellations were the result of a potential buyer not qualifying for a loan.
Additionally, Capital Economics says “any improvement in credit conditions won’t be significant enough to generate actual house price gains,” and potential ramifications from the euro-zone pose a threat to future credit availability.

Ralph Bartholdt
Agent Keller Williams Coeur d'Alene

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