If you are thinking that it may finally be time to buy a home and move into it, you may want to hold off – still. The housing market has definitely gone through some changes in the last couple of months and some of them aren’t necessarily for the better.
Since April, existing home sales dipped a bit, by just under 1%. But, if you look at the same period a year ago, the dip was more dramatic, at almost 13%. During that time, the homebuyer tax credit was in effect and a lot of people were moving into new homes to take advantage of it. But, this year, prices are still going down. The median home price at the national level is now at $163,700.
So, what’s halting all the home purchases? Why aren’t more people moving into new homes? Experts are blaming low appraisals and tight credit, which makes sense. Even though more people may be able to move, there are now very restrictive underwriting standards in place right now. The banks simply aren’t lending.
Another thing that’s weighing heavily on the market is the fact that distressed homes are still out there. These houses trade at double-digit discounts, which is often a great savings to someone moving on a budget. However, they made about 37% of all home sales about a month ago. Although this is lower than earlier this year, if you look at the same time last year, distressed homes are selling like hotcakes.
One group that is still pretty excited about the housing market’s current flailing are the investors. At the end of the first quarter of 2011, investors buying homes in all-cash deals made up about 35% of the sales. Last month, that rate was at about 31%.
A sign that things might brighten up in the near future is that mortgage rates are dropping. This is a good sign for everyday people that want to move into a house that they can actually afford. For the fifth straight week, fixed-rate mortgages declined. The 30-year fixed rate mortgage is coming in at around 4.61% while 15-year mortgages are showing at 3.8%.
Wondering how this might affect you? First of all, if you’d rather see your investment in a home appreciate rather than just buy and move in, don’t expect that investment to increase anytime soon. It will eventually, but you’ll likely have to wait it out. Economists aren’t expecting anything like that until sometime in the middle of 2012.
Part of the slow return to normalcy may be blamed on consumers themselves. Despite low home prices and lower interest rates, a lot of people just aren’t moving right now. This is likely because the job market isn’t so reliable across the board; we’re still at about 10% unemployment at the national level. People just aren’t ready to take that plunge and make a huge financial commitment.