Market News
NEW YORK - Wall Street began the second quarter with a big rally Tuesday as investors rushed back into stocks, optimistic that the worst of the credit crisis has passed and that the economy is faring better than expected. The Dow Jones industrials surged nearly 400 points, and all the major indexes were up more than 3 percent. Analysts believe there must be a recovery in bank and brokerage stocks to lead major stock indexes higher. Some of the biggest financial players had their biggest moves of the year Tuesday — Citigroup Inc. shot up 11 percent, JPMorgan Chase & Co. rose 9 percent, and Lehman surged 18 percent. Renewed enthusiasm that the credit crisis might be waning was also felt in the Treasury market, where government securities fell as investors withdrew money to take bets on stocks.
NAR Lawrence Yun,Chief Economist
"The housing market will also get some relief. A higher loan limit – up to $729,000 from $417,000 – in several local areas, including Los Angeles, Orange, and San Francisco counties, will have a big impact in bringing out the buyers. As a result, home sales in the second half of 2008 will no doubt be much stronger than in the first half. Look for existing-home sales to rise to a 5.7 million-unit pace in the second half versus 4.9 million in the first half. Rising sales will also bring down inventory and help strengthen home prices. The national median price of an existing home will fall in the first half of the year and then rise in the second half. For the year as a whole, the median price will have fallen by 1 percent – after having fallen 1.4 percent last year. Of course, there will be tremendous local market variations. The Northeast region is likely to be first region to show signs of stabilizing and then strengthening housing market conditions. The West region will likely trail behind."
Housing still appreciating in most markets!
Resolve to buy in 2008
Demand for U.S. residential real estate isn't dead, it's just stalled, writes Thomas Kostigen of Marketwatch. He notes that sales of luxury homes have been strong and that "with the value of the U.S. dollar low and real estate prices dropping, it isn't hard to imagine foreigners taking bigger positions in properties here as part of their overall portfolios." Prices and sale volumes are already down 25% in some areas of South Florida, and when overseas buyers see values dropping 50%, they are likely to buy, he says. "At the first blush of renewed energy, the real estate market will bounce back," he says.
"Housing valuations are almost back to long-term norms," said National City's chief economist, Richard DeKaser. He called current affordability "the best in the past four years. "But DeKaser cautioned that home prices could fall even further. "This isn't to say home price declines are over," he said. "We could move below historic norms. By the end of 2008, housing markets could be broadly under valued." It may be the best time to buy a house in more than four years. (Source: CNN Money)
"The thing that will make home prices stop falling is the very same thing that will push mortgage rates higher," says Jim Svinth, chief economist at mortgage firm Lending Tree. So anything you gain by a further drop in prices might be offset by rising financing costs. (Source: TIME )
Finally! The New Baby Boom to Bode Well for Home Sales
Economists can argue about the short-term prospects of home sales as consumers ponder the best time to buy. But there’s little doubt among analysts about the market’s long-term prospects.The United States is adding one person every 13 seconds. At the start of 2008, the country had surpassed 303 million residents, almost 3 million more than it had at the start of 2007, the Census Bureau says.
For real estate professionals, the country’s continuing strong growth is a good sign in today’s challenging times. “With a population increase of 3 million, household formation typically expands by up to 1.5 million,” says NAR Chief Economist Lawrence Yun
For Yun, the Census Bureau figures suggest demand for housing will rise. Last year, new household formation totaled only 650,000 units, about half the historical norm. “Many people have evidently doubled up with roommates or have moved back in with family,” he says. Markets should see more demand once consumer confidence is restored. (Source: Realto\Realtormag )
