The housing meltdown seems to be stabilizing, and nowhere more so than in the metro Atlanta area. Atlanta mortgage rates are down, and the average days on the market before a home sells is declining. And prices nationally are up 3% from their May, 2009 lows.
So, all is rosey…right?
Wrong. There are two things that could rock the housing market again. So let’s take a look at each of the two, and see if we can divine what the housing market may look like at the end of 2010.
1. As I have relayed here on this blog several times of late, the Fed is saying they are going to stop buying Mortgage Backed Securities – those bonds that determine long-term mortgage rates – after March 31, 2010. Of course, as the minutes of the Fed meeting stated a couple weeks ago -
“The Committee will continue to evaluate its purchases of securities in light of the evolving economic outlook and conditions in the social markets”
Which means that, despite current plans, they may yet continue to buy the MBS to keep mortgage rates low. If rates do quickly rise, it will likely be a short-term lull in home buying, as buyers adjust to the ‘new normal’. Long term, home prices may fall more to make homes affordable, but buyers will still buy…if they are able.
2. Jobs and Credit. People need a job, an income, to buy a home. And with unemployment still looming large, that means fewer people who can qualify for a mortgage loan. And the longer individuals remain unemployed, the more likely it is that they may fall behind on current mortgage or other payments. And their credit will not then allow them to buy a new place with a loan.
Here in Georgia home buyers may be in a fairly good position in this regard, as new unemployment claims have dropped nearly 21% over the past year, and nearly 10% in metro Atlanta. So, jobs and credit wise, we are looking better than most. And we could continue to improve the economy – the main factor there being what the Federal and State governments do with taxes. If taxes rise too much, then unemployment will likely rise again.
And, Atlanta homes did not have the massive run-up in home prices that other pockets around the country did in the bubble years.
So, metro Atlanta home values are set to remain stable, even in the face of rising mortgage rates, so long as taxes remain fairly stable, thus aiding the jobs recovery, and therefore helping prospective home buyers protect their credit.
That’s my view. A very possible housing stabilization – with lots of uncertainty.
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