The Answer to Your Question is…the Housing Market Found It's Bottom-

The Answer to Your Question is…the Housing Market Found It's Bottom-

question-mark.jpgHave you been searching across the internet looking for a crystal ball on the Bay area Housing market and what direction it is going? The fact is the only way you know when you have found the bottom of a housing market is when the market has already turnd and you missed your oppertunity. Here are some highlights of a great article in the Wall Street Journal outlining why the housing market has all ready bottomed.

 

 

The dire headlines coming fast and furious in the financial and popular press suggest that the housing crisis is intensifying. Yet it is very likely that April 2008 will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now.

The boom made housing unaffordable for many American families, especially first-time home buyers. During the 1990s and early 2000s, it took 19% of average monthly income to service a conforming mortgage on the average home purchased. By 2005 and 2006, it was absorbing 25% of monthly income. For first time buyers, it went from 29% of income to 37%. That just proved to be too much.

Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying. This caused the bubble to burst.

Since then, house prices have fallen 10%-15%, while incomes have kept growing (albeit more slowly recently) and mortgage rates have come down 70 basis points from their highs. As a result, it now takes 19% of monthly income for the average home buyer, and 31% of monthly income for the first-time home buyer, to purchase a house. In other words, homes on average are back to being as affordable as during the best of times in the 1990s. Numerous households that had been priced out of the market can now afford to get in.

Housing Market Finds Bottom…Link to article.

Subscribe to our daily mortgage market emails.

Have a Question?

Legal Disclaimer
Or give us a call
925-484-5363