Claudette's Blog

We are all painfully aware that there has been much gloom lo these many months of depressing housing data including  recent numbers by the Commerce Department that showing new home sales have fallen to their lowest level since 1991. 

However, I choose to take good news where I can get it.  New housing reports from the Warren Group,  indicates that, while prices continue to drop, there has been a healthy pickup in the number of single-family homes that have been sold recently in Massachusetts. 

Sales in October 2007 were 3,253 and in October 2008 had an increase to 3,698.               

A combination of events may be contributing the rise in recent sales.   Sellers who have previously held fast to their prices are beginning to see the writing on the wall and realize that if they want or need to sell, they have to become more flexible.  As I always tell my buyer clients who want a bargain, the winter is a good time of year to shop for a home.  Sellers who have their homes on the market during this time are usually pressured to sell.  If not, they would wait for the spring when there are more buyers and it is a less intrusive time to have their home on the market.  It just makes sense --who wants to have home showings during the holidays?

Some families in Metrowest Boston are seizing the opportunity to pick up properties they would not otherwise have been able to afford.   These are not necessarily only foreclosures or short sales but also homes that have been on the market for many months forcing sellers to decide that they must make a deal.  

Mortgage rates have also declined according to Bankrate.com and this may have coaxed some buyers to come back in and find their dream home.

Another promising sign reported by the Massachusetts Association of Realtors is that the inventory of residential properties on the market decreased in October by 13 percent compared October of last year.  There is now a 9.9 months of supply of inventory as opposed to 11.9 months of supply in October 2007. 

Is all of this simply a sliding indicator from the activity of the summer when these sales transactions were originated?  November's numbers will tell us more. 

The recovery of this housing market may be still far down the road, but, for many who have chosen to seize on it, this is a time for a bargain.    

Lately, it seems as though with each passing week there is another announcement of a government bailout or program with an astronomical figure attached to it.

Tuesday, the Treasury announced two new plans to help stimulate the housing market.  The first plan is mainly to finance loans for consumers and the other one will push down home mortgage rates.  These are the latest actions to begin to stem the tide of losses from the subprime mortgages that have spread throughout the economy. 

With this new plan, the Fed will be pumping large amounts of money into specific markets for mortgages as opposed to reducing short-term rates, which is the usual protocol, in this most recent effort to help the ailing housing market.

Those who have been waiting on the sidelines for an opportunity to get into a home may be buoyed by this $600 billion government plan to purchase mortage-backed securities and debts issued by Fannie Mae, Freddie and Ginnie Mae.

This effort should also keep interest rates down and, therefore, offer support for the ailing housing market.

The National Association of Realtors has welcomed the new plan and estimates that every 1 percent reduction in interest rates can generate 500,000 home sales.

Lawrence Yun, NAR chief economist has said, "We commend the Fed decision because it will directly bring down long-term interest rates.  The level of investment should be aggressive enough to bring interest rates down in a meaningful manner.  As we've seen in past recessions, home sales rise when mortgage interest rates fall." 

Yun has also said that NAR will continue to push for a temporary, government-financed, interest-rate buy-down program to get rates down to 4.5 percent or less.

James Lockhart, director of Fannie and Freddie's regular, the Federal Housing Finance Agency, said the $600 billion program should be a "major boost" to mortgage and housing markets.

Will this plan get the housing market back on track?