Housing Market may Have a Better Year Ahead

Would the new year ring in some much-needed cheer for the housing market? Probably, says CBSNews.com. There are some signs of a turnaround in the horizon, despite the challenges. So, what are some of the telling signs of a better future?

CBS says the official unemployment rate slipped to 8.6 percent, and U-6, a broad measure of unemployment dropped less than 16 percent. That’s the lowest since the recession started. This means there are more people with work, which translates to money for consumers wanting to buy a home. Joblessness has been one of biggest obstacles in the path of a housing market recovery. With shrinking income, families have not been able to gather up enough finances to pay for mortgages, property taxes and insurance premiums.

“Most Americans expect no improvement in their personal financial situation in the next 12 months and will likely remain wary about undertaking the significant financial obligation associated with homeownership until their view of their income, expenses, and job security heads in a more positive direction,” Doug Duncan, vice president and chief economist of Fannie Mae told CBS.

The improved job numbers are a much-needed start. But that’s not all.

There’s some good news for the housing market coming out of Fannie May’s November National Housing Survey. For the first time in six months, homeowners say they expect home values to rise 0.2 percent over the next year. Home prices have taken a huge battering in recent years because of reasons such as the economic downturn and flood of foreclosures.

Historic low mortgage rates are also a positive sign, CBS says. Interest rates are hovering under 4 percent for a 30-year fixed mortgage, and 15-year mortgages are going anywhere between 3 to 3.25 percent, CBS says. This, coupled with decreasing home prices, is making it lucrative for potential homebuyers to jump into the market. Low refinancing rates are also freeing up cash and making consumers more confident about their personal finances. Other indications of a better 2012: loan payment delinquencies are shrinking. TransUnion said in a recent release that mortgage delinquency rates will fall to 5 percent by 2012 end.

Toll Brothers’ Earnings Beat Analysts’ Estimates

Thanks to improved sales and prices at its East Coast Communities, Toll Brothers Inc., America’s luxury home building Goliath, reported earnings that beat analysts’ estimates. Net income was $15 million, or 9 cents a share, and analysts were expecting earnings of 6 cents a share, according to Bloomberg. That’s a welcome sign for the housing market. Toll Brothers CEO Douglas Yearley Jr. said in a statement that the company has done well in most key metrics despite housing starts being down 60 percent. Foreclosures have clogged the market with homes that dragged down existing and new home values. The trend deterred builders from launching new products in the market. Bloomberg says that Toll Brothers’ fourth quarter results were boosted by rising demand for homes in the Boston-to-Washington corridor. With little pockets such as that showing signs of life, there’s hope that this trend will spread to wider areas.

Florida on the Recovery Path

According to three economists, the housing market in the Sunshine State is slowly waking up. “Our state is in a mini-recovery,” said Florida Realtors® Chief Economist Dr. John Tuccillo at the state association’s 2012 Real Estate and Economic Forecast Conference in Orlando. “Sales are trending up, listing inventories are falling, the supply of lender-related properties has stabilized, and we are seeing multiple offers on homes in some local markets.”

Mark Vitner, senior economist at Wells Fargo in Charlotte, N.C., said despite challenges, he expects the U.S. economy to recover, which means more people would be encouraged to buy homes in Florida.

“Florida’s economy is recovering, with tourism and healthcare leading the way,” Vitner said. Many prefer states such as Florida for an investment on a second home such as a vacation or retirement home. With incomes shrinking and the economy convalescing, consumers have shied away from making any big investments or betting on a housing market that’s on life support. But that’s slowly changing, said Dr. Lawrence Yun, chief economist for the National Association of Realtors®. Yun said that there have been sharp drops in inventory in many Florida markets – a sign that demand is on the uptick.

“That’s a major change from just a year ago,” he said. “Buyers have stepped back into the Florida market.” International buyers have played a major role in the market, many of whom are beelining for a piece of Miami life.