According to an article by CNN Money featuring Clear Capital’s Alex Villacorte, an improving job market, a decrease in the number of home owners falling behind on their mortgage, and an anticipated improvement in access to mortgages is expected to help home prices start bouncing back by next year.
Home prices have fallen and mortgage rates are hovering near record lows, pushing home affordability for the average family to record highs. Meanwhile, rents have been on the rise, making owning a home cheaper than renting in most areas of the country, according to recent surveys. But these home prices won’t last for long, especially in key markets like Southwest Florida and Central Arizona.
Also contributing to this predicition are investors eyeing profits in rentals and snapping up bank-owned properties. Clear Capital’s Alex Villacorte attributes this as helping to lead to an increase in prices on foreclosed properties. This “could have a significant impact on the market overall in terms of providing a rising floor to home values,” Villacorte told CNNMoney.
Some areas are already seeing prices rise. In Phoenix, housing prices have already increased 8.4 percent during the three months ending April 30, and South Florida saw prices bump up 4.6 percent quarter over quarter, according to Clear Capital data.
If you want to buy, you want to act quickly because mortgage rates are expected to tick up slightly by the end of the year. The increase is being sparked by greater demand, says Doug Lebda, CEO of LendingTree. He predicts 30-year fixed-rate mortgages will inch up to 4.5 percent by the end of the year, which is still low, however, by historical standards.
The Mortgage Bankers Association is also predicting a big leap in mortgage loans next year. For this year, MBA estimates that buyers will take out loans totaling about $415 billion, but by 2013 that number is expected to nearly double to $706 billion.
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Source: “Buying a Home Won’t get Much Cheaper,” CNNMoney (May 3, 2012)