While September’s inflation figures came in low, new home starts and building permits were down last week. Industry analysts are predicting higher foreclosures rates ahead as approximately 500,000 homes face interest rate adjustments that may add to the already record high rate of foreclosures. The addition of inventory due to foreclosures may impact resale market prices due to competition for buyers as inventory levels are already high. The Fed is predicting that the housing sector will continue to be a significant drag on the economy heading into 2008, however since inflation seems to be in check Federal Reserve policy makers may consider cutting the federal funds rate again later this month to keep the economy moving in light of the deeping housing recession.
Buyers meanwhile are taking a cautious approach as they wait for non-comforming rates to stabilize and watch prices to determine if they reached bottom. Conforming mortgage money is available at still attractive rates, however at current prices it only impacts the lower end of the price structure. Congress is attempting to revitalize the FHA loan program by increasing loan amounts. Even though the mortgage industry is experiencing trials and tribulations certain players remain viable. Bank of America has said that they have 1 Trillon Dollars in their mortgage portfolio to lend, so mortgage money is available for those buyers in the market. Gone however are the easy no doc, stated income programs that caused the sub-prime mortgage problem.
The housing market still exists. Sellers looking to sell need to approach the sale pragmatically allowing for current market conditions, while Buyers have lots of inventory to choose from. Both Buyers and Sellers should follow the advice of their local Realtor who will know the particulars for their specific marketplace, as conditions differ from State to State, locality to locality.