Well before we get carried away and start making claims that the recession is over or the Economy is fixed we need to take a breath. The media still refuses to report the Mortgage and Housing industries correctly.
With most of the buyers looking for a great deals they continue to snap up foreclosures and incentives for first-time buyers has helped but the majority of these sells are by investors, aka bottom feeders. It is being reported that sales of pre-owned homes rose 2.9% to a seasonally adjusted annual rate of 4.68 million in April.
Whether you are a student of the new math or the old math sales are rising in areas with the greatest price declines, the same cities that were at the center of the earlier housing bubble. Does this surprise anyone?
This is great as the economy will get back on its feet quickly if this could sustain itself but with all of the restrictions today, the Bond Market has fallen currently 210 bases points. This will hurt mortgage rates regardless to how many M.B.S. the Federal Reserve may purchase.
Here are a few things to consider;
- First-time home buyers accounted for about 40% of sales in April.
- Distressed sales, foreclosures and short sales, accounted for about 45% of sales.
- Sales are down 3.5% in the past year and are down 35% from the peak nearly four years ago.
- The April sales level was close to economists’ expectations for a 4.70 million pace.
- As of may 1st 2009 the banks are now in control of all appraisals. This will single handily slow things down and history will prove this legislation to be a mistake.
- Mortgage rates move up 1/2% to 5.25% for a 30 year fixed mortgage in the month of May.
- The HARP loan is now nearly useless with par rates at 5.5% for a 30 year fixed mortgage.
- Inflation is now set for a record run up that will make Jimmy Carter’s look mild in comparison.
In a report from the Federal Housing Finance Agency said home prices fell 0.5% in the first quarter of the year and were down 7.3% in the past year. The FHFA price index measures sales of the same homes over time, and is therefore not influenced by a different mix of homes sold in a period as the median sales price is.
I am not an Economist but I do not believe that the Economy is fixed, do you?