Is Now the Time for Some Home Buyers to Make a Deal?

While housing prices are continuing to fall, prospective home buyers may not want to wait much longer for the market to hit bottom, experts say.

"Most of the big declines in home prices have occurred," says Lawrence Yun, the chief economist at the National Association of Realtors. "Any more will probably be minimal." Part of the reason is that homeowners are becoming more realistic in listing their asking price.

"Home prices are where they should be," says Robert Abbott, co-owner and VP of Abbott & Caserta Realtors in northern New Jersey. "Sellers are accepting the current reality and are pricing more realistically."

The latest Case-Shiller report shows that home prices in 20 cities dropped 18.6 percent in February from a year earlier. But for the first time in 16 months, that rate of decline eased from the prior month.

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Real Estate Market Update

Residential Highlights
Portland metro area market activity continued to grow over last month, but fell short of reaching March 2008 levels.

Comparing March 2009 with the same month in 2008, closed sales dropped 30%. Pending sales also fell 15.5%. New listings decreased 28.5%.

On the other hand, when comparing March 2009 with February 2009, closed sales grew 38.2% (1,184 v. 857) and pending sales were up 28.3% (1,637 v. 1,276). New listings grew 6.2% (3,685 v. 3,471).

Pending sales typically rise from February to March, but this year it increased at a steeper rate (28.3% in 2009 - vs. 5.5% in 2008 and 8.3% in 2007).

Inventory also dropped to 12 months, its lowest point since October 2008. Active residential listings in March numbered 14,158 – down slightly from 14,188 in February. This is notable, as active listings have typically grown over that same time
frame (7% in 2008 and 6.6% in 2007).

Sale Prices
The average sale price for March 2009 was down 11.8% compared to March 2008, while the median sale price dropped 14%.

Month-to-month, the average sale price and median sale price are both down when compared with February levels; the average sale price decreased a slight 0.5% ($297,000 v. $298,500) and the median sale price was down 4.9% ($246,400 v. $259,000).

Is FHA Key to Housing Turnaround?

Federal Housing Administration loans can be a very good deal for home buyers, especially those who don’t have a lot of cash or whose credit rating isn’t stellar, experts say.

FHA loans now account for 20 percent of new mortgages, up from 3 percent in 2006. What's more, the number of authorized FHA lenders has increased 500 percent in two years.

Other benefits of FHA loans include easy loan modifications for borrowers who fall behind, easy refinancing plans if rates decline, and low rates overall, which don’t rise if the borrower has a low credit score. There are no income restrictions on FHA loans, so even borrowers with good incomes may find them attractive.

FHA loans still require a pre-settlement inspection of the home, but the process isn’t nearly as arduous as it once was, says George Hanzimanolis, past president of the National Association of Mortgage Brokers.

Source: CNNMoney.com (04/01/2009)