Housing market may have turned a pivotal corner

We're seeing a significant increase in activity in Bodega Bay and this article from Reuters seems to confirm that it's beginning to happen elsewhere...

From Reuters:
With home prices in many areas declining to the point where owning a home is a more affordable option than renting, especially in the West, many potential home buyers appear to be getting off the fence and starting to purchase. Add affordable prices to record-low interest rates and the demand for housing has reached a pivotal turning point.

MAKING SENSE OF THE STORY FOR CONSUMERS

· Home prices in some areas of California have dropped so much that monthly mortgage payments on single-family homes are comparable to apartment rents, according to recent data. Mollie Carmichael, a senior vice president with John Burns Real Estate Consulting, says that in the Inland Empire, the average monthly rent for an apartment is $1,157. Carmichael adds that the average after-tax monthly mortgage payment on a median-priced single-family detached home is $1,154 in the same area.

· The large number of distressed properties has led to a surge in home sales around the country. Existing home sales across the U.S. rose 6.5 percent to an annual rate of 4.74 million units in December, according to the NATIONAL ASSOCIATION OF REALTORS® (NAR). A senior director of housing economics at Moody’s Economy.com believes the latest NAR report means sales have reach bottom.

· Interest rates on 30-year, fixed-rate mortgages averaged 5.12 percent for the week ending Jan. 22, which is almost 1 percentage point lower than the average rate in late November 2008, according to Freddie Mac. The prior week, 30-year mortgage rates average 4.96 percent, the lowest since Freddie Mac began its weekly survey in 1971.

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Consumer confidence in surprise rebound

I've considered this one of the most important factors when considering the potential for a recovery and it will be interesting to see if this trend can continue for a few months before we can consider that recovery a reality...

From Reuters:
While still low, the index of consumer sentiment unexpectedly rises to 61.9 in January from 60.1 in December.


Read the article

Fact Facts for January 2009

Calif. median home price - November 08: $285,680(Source: C.A.R.)
Calif. highest median home price by C.A.R. region November 08: Santa Barbara So. Coast $1,200,000 (Source: C.A.R.)
Calif. lowest median home price by C.A.R. region November 08: High Desert $148,580 (Source: C.A.R.)
Calif. First-time Buyer Affordability Index - Third Quarter 08: 53 percent (Source: C.A.R.)
Mortgage rates - week ending 1/15/09 30-yr. fixed: 4.96% Fees/points: 0.7% 15-yr. fixed: 4.65% Fees/points: 0.7% 1-yr. adjustable: 4.89% Fees/points: 0.5% (Source: Freddie Mac)

Prices are holding steady at the end of 2008 after an upward blip and downward correction midway through the year. For about 1.5 years now, the median price has been in the mid-800’s for Bodega Harbour and about $800K for all of Bodega Bay.

Expect to see a slight uptick in prices this year with interest rates continuing to remain historically low in combination with plenty of government programs in place designed to stimulate the real estate market. 2009 is poised to be a year of recovery - and opportunity.