Housing affordability rates are still dropping and are staying at 60-year lows, prices are declining, yet borrowers are still having trouble obtaining loans due to tight underwriting and credit standards.
The 15-year fixed rate hit an all-time record low of 3.13%, and the 30-year fixed-rate was at 3.88% for the week ending March 8. Last year at this time, the two rates average 4.15% and 4.88% respectively.
“With these historically low rates and declining house prices, the typical family had more than double the income needed to purchase a median-priced home in January,” said Frank Nothaft, VP and chief economist for Freddie Mac.
According to Fitch Ratings’ latest quarterly market update, home prices are still overvalued across most of the country, despite the pre-mentioned affordability conditions. Fitch’s Sustainable Home Price model (SHP) shows that residential property values should drop an additional 9.1% nationwide. Last quarter, the model showed a decline of 13.1%.
Yet one of the biggest issues with housing market, according to Fitch, is the market’s inventory, despite improved affordability and declining prices. The agency says a key factor underlying this trend is the still tight underwriting and qualification standards, with access to credit still largely limited to borrowers with meaningful equity or sizable down payments.
Unsettling in addition to the continued decline in prices is recent unemployment statistics. According to data released Thursday (March 8) by the U.S. Department of Labor first time claims for unemployment insurance rose by 8,000 in the week ended March 2, which is the third straight weekly increase and the longest since July 2010. Continuing claims increased 10,000 to hit 3,416,000, which was the second straight weekly increase.
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Iklima says:
September 16, 2012Very nice indeed. Interesting way to acaporph the soft landing argument.If pundits want prices to stay at current eleveated levels they must assume an extremely high level of earnings growth of the underlying asset. There is not and has not been any significant earnings growth for Vancouver real estate. This leads me to believe that we will acaporph values not seen for a number of years. Time will tell of course.
Mourad says:
September 14, 2012Your logic, while widely actcpeed, isn’t necessarily accurate. The value of a piece of property only appreciates to the rate that someone is willing to pay for the property if the property is on the open market. Most people do not intend on selling their homes, nor are the valuations similar to what a party could get on the open market in most cases. Since city valuations are made on by using inexact comparable properties, i.e. a 4 bed/2 bath home to a 4 bed/2 bath home of similar build years, and not by taking into consideration the actual worth of the home on the open market. If something is not for sale, and never will be for sale, the home owners are being taxed on an illusionary increase in value that never will be recognized. This is much like a retirement account, however, those are not taxed at those appreciated rates until they are redeemed, since the actual value of the investment cannot be recognized until capitalized upon. Therefore, parties taxes on their homes, not unlike mine, have artificially risen at enormous rates without a comparable increase in my quality of life in Grand Forks.Finally, your article fails to acknowledge tax rates in surrounding communities. While I am admittedly lacking exact or concrete figures, I have been given the impression by many people that G.F. taxes are quite high. As a person who will be in G.F. for some time, I would greatly appreciate people involved in local government who are committed to slowing what I feel are unfair taxes on property.
Seven says:
September 14, 2012I was really coufsned, and this answered all my questions.
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