Buying a home is dependent on affordability. During the late 1970′s, when interest rates were near 20%, many prospective home buyers were priced out of the market. Mortgage rates can be the deciding factor in whether a buyer can afford a particular home and will determine their eligibility from a loan standpoint. The current 3.98% interest rates have been an important factor for the buyers that have made the decision to buy now. A slight increase in rates can be the difference between a $250,000 home and a $300,000 property. Buyers are now taking advantage of the combination of declining prices and low-interest rates.
Jobs are vital to the housing market recovery. People that are unemployed or fear they might be, won’t buy homes. House prices go lock-in-step with job growth. The connection between housing and construction play an important role in economic growth and the creation of jobs. As prices declined in California , so did employment in construction and other housing related services. After less than attractive last couple of years of employment news, the outlook has improved with the private sector adding nearly 200,000 jobs in November and the unemployment rate dropped to 8.6%
Foreclosures have had a negative effect on the housing recovery. Lenders have held back a huge backlog of foreclosed homes due to a lawsuit by a group of states that claim lenders and mortgage servicers of improper foreclosure practices. The processing of these foreclosures will determine how long it takes for house prices to stabilize and a broader housing market recovery
In our Sacramento region, the number of homes sold are up and inventory has shrunk. The average price of homes sold declined this year. A pattern that can be attributed not to a declining market but the fact that more buyers and investors are flocking to smaller less expensive homes. More than likely, we will not experience the housing frenzy that was prevalent in the early and mid 2000′s. Many home buyers have taken a leap of faith and bought a home this year with the knowledge that homeownership is still the best long-term investment a family can make. We expect more of the same in 2012. Please visit my website www.JohnnyBrooksHomes.com for helpful tips on buying and selling a home, scan my other informative real estate blogs and easy access to view local area homes for sale.