Tim McLaughlin VP Weichert Financial Services
It’s one thing when special interests declare “the end” of the housing debacle. But it’s another when an organization such as the Joint Center for Housing Studies at Harvard University calls the bottom.
Center Managing Director Eric Belsky says housing as entered “the early innings” of recovery, his statement rings with an air of authority. Belsky points out that rental markets have turned the corner, home sales are strengthening and that all-important “floor” is forming under home prices. “With new home inventories at record lows,” the economist says, “unless the broader economy goes into a tailspin, stronger sales should further stabilize prices and pave the way for a pickup in single-family housing over the course of 2012.” And even as sales are pick-up, so, too, is the rental sector on the mend, the Joint Center’s director adds. Thanks to sharp drops in construction and an increase of over 4.4 million renters since 2005, vacancy rates are falling, rents are increasing and multifamily construction is up “solidly.”
What the housing sector needs now is a good shot of job growth. A sustained increase in jobs would bring household growth back to its long-term pace “and spur demand,” says Chris Herbert, who directs research at the Harvard center. Belsky states the fact that, in survey after survey, respondents state that the overwhelming majority of young adults say they will eventually become home owners.
Right now, says Belsky, they’re on the sidelines, but as the markets continue to tighten as expected, he says, “these fence-sitters begin to take advantage of today’s lower home prices and unusually low mortgage rates. With rents up, home prices sharply down, and mortgage interest rates at record lows, monthly mortgage costs relative to monthly rents haven’t been this favorable since the early 1970s.” So for all those so called fence sitters out there: terrific news. Mortgage rates this weekend are at all time historical lows, with 30 year rates in the mid 3% range, and 15 year mortgages in the high 2’s. So whether you were waiting for the bottom in both housing prices and interest rates, or if you have been delaying that opportunity to refinance and reduce your payment and/or loan term, now is your chance.