Housing Market Stuck Despite Low Prices, Rates
News > Economy
Chris Arnold
Monday, October 17, 2011 at 12:01 AM
Font size: A | A | A | A |

A bank-owned sign is seen in front of a foreclosed home in Miami. Florida was among the hardest hit states in the real estate collapse.
A bank-owned sign is seen in front of a foreclosed home in Miami. Florida was among the hardest hit states in the real estate collapse.
Joe Raedle | Getty Images

One reason for the continued gloom: It's too hard for many people to qualify for the low rates. But a new program the Obama administration is considering could help millions save an average of $2,000 a year through refinancing.

   
Related Articles
Housing Recovery At Various Stages Around The U.S.
Just as communities experienced housing booms differently, they feel varying degrees of recovery.
Home Prices Edged Up In July, Report Says
But the housing sector is "still far from a sustained recovery."
Mortgage Savings: Leaders Seek Refinancing Options
The president wants to help homeowners refinance, but critics say it could be unfair to investors.

Three years ago, the real estate market was simple — simply terrible, that is. In virtually every part of the country, foreclosures were shooting up and prices were plunging. Today, the real estate picture is more nuanced. Foreclosures are still rising, but prices are stabilizing in some markets, making home-buying look more attractive.

If you had talked to some good economists just before the housing bubble burst, they would have told you it didn't make sense to buy a house.

"At the peak of the housing bubble, house prices were way out of line with people's incomes so housing wasn't very affordable," says Mark Zandi, chief economist of Moody's Analytics.

Zandi, who tracks home prices around the country, says the cost of owning back then was just too high compared to renting.

"Way out of line with rents ... it was slam dunk you should rent not buy," Zandi says. "All those things have reversed themselves given the collapse in house prices. So In many parts of the country it makes sense to buy not rent."

Average home prices have fallen 35 percent nationwide from their peaks. On top of that, interest rates are at record lows — around 4 percent for a 30-year loan.

Zandi says that has probably helped housing a bit. But it definitely hasn't sparked a big home-buying resurgence yet — a sign that housing is still in the dumps.

Low mortgage rates "would normally bring people into the market with a real sense of urgency," says Chris Mayer, an economist at Columbia Business School.

Mayer says one reason that's not happening is that it's too hard for many people to qualify for the low rates. The Obama administration says it's looking into a way to help homeowners qualify at least to refinance. That could prevent foreclosures; it's something Mayer has pushed for.

"We think there are literally tens of millions of borrowers who could save an average of a couple thousand dollars a year if we were to open up refinancing in this market," he says.

Top federal housing officials expect to announce a new push in this direction in a couple of weeks.

Some neighborhoods need much more help than others when it comes to housing. Homes and condos in many parts of New York City, Washington, D.C., and Boston don't exactly look cheap.

"The most attractive parts of the country are where prices have collapsed — parts of Florida, Atlanta, Arizona, Nevada, parts of California," Zandi says. "The price declines have been 50 to 60 percent and they've overshot."

So there are bargains out there, but buyers definitely need to do their homework. [Copyright 2011 National Public Radio]



This article is filed in: Economy, Around the Nation, Business, Home Page Top Stories, News

Also in Economy  
Is Housing Sector Getting Better? Increase In Starts May Signal It Is
There was a 2.6 percent increase in housing starts in April from March.

Debt Ceiling Debate Is Revived In Washington
The debt ceiling topic came up at the third annual Peter G. Peterson Foundation Fiscal Summit.

The Latest On Greece's Financial Crisis
Government talks in Greece ended badly after the president invited the leaders of five parties to try to form a coalition. Meanwhile, analysts, economists and several European politicians are talking about a Grexit — a Greek exit from the eurozone — as being inevitable.

Portugal Looks Back On 1 Year Since Its Bailout
Uncertainty in Greece is rattling nerves in other European economies worried about a domino effect, if Athens were to leave the euro. Among those is Portugal. Wednesday marks one year since that country received a 103 billion dollar bailout. Reporter Lauren Frayer has more on how Portugal is faring.

Greeks To Head Back To Ballot Box After Talks Fail
Political leaders failed to agree on a governing coalition to run the economically-troubled country.

Comments  
Post a Comment