Purchasing
- Your first home
- Your next home and move
- An investment property
- A vacation home
Refinancing
- To tap your home equity
- To save money
- To avoid rate increases
- To lower monthly payments
Home Equity
- Loans and lines of credit
- Finance major expenses
- Consolidate Debt
- Invest
Home prices flatten out
By Melissa Wirkus
We are in the midst of the bursting of the housing bubble. There is a surplus of homes on the market, and new numbers show that home prices are at a standstill.
Figures for the second quarter of 2006 have just came in, and they are not reporting any good news for the housing market.
An August 15, 2006 article by Les Christie, “Home prices in deep freeze,” gives some interesting and important information about the state of the housing market.
“After several years of turbo-powered growth, home prices have gone into a stall, according to the latest prices released Tuesday. Nationally, the median home price rose just 3.7 percent to $227,500 from last year's second quarter to this year's, according to the National Association of Realtors.”
Although these figures point to bigger problems for the housing market, many analysts and experts are still confident that the housing market will experience a slow leak in the bubble, as opposed to a huge bust.
“‘With more sellers competing for the pool of buyers, the pressure on home prices has evaporated in most metro areas. . . We are presently experiencing a soft landing in the housing sector,’ said NAR's chief economist, David Lereah, in a statement. In the quarter, overall condo prices actually fell 0.3 percent to $225,800.”
With so many negative aspects, it is easy to get discouraged about the current state of the market, although everyone knew it was coming.
“The slowdown in the quarter was anticipated, with several signs in recent weeks pointing in the same direction. Last week two of the nation's homebuilders - Toll Brothers and Hovnanian Enterprises - projected lower sales and profits. NAR's own report earlier this month forecasted a 6.5 percent drop in sales of existing homes for the year and pointed to a 3.8 percent increase in inventories, to a 6.8 month supply.”
In other bad housing market news, there is also an increase in foreclosures and the amount of people who have defaulted on their mortgages.
“There has also been a spike in foreclosures, up 25 percent, according to RealtyTrac, which follows the foreclosure market, and an increase in delinquent mortgages compared with last year, according to statistics compiled by the Mortgage Bankers Association, NAR.”
With all of this bad news, it is hard to be optimistic, but there are some markets that are still doing fairly well.
“Some of the best performers were in markets that welcomed a large number of Katrina refugees. In Baton Rouge, Louisiana, prices leaped 11.6 percent from last quarter and 27.3 percent from a year earlier. That was the biggest percentage gain of any metro area in the United States. Nearby Beaumont, Texas gained 18.3 percent from a year ago. Other strong markets included Ocala, Florida (up 25.3 percent for the 12-month period), Virginia Beach (23.6 percent) and Gainesville, Florida (19.3 percent). Los Angeles led the nation's largest cities, racking up a gain of 14.6 percent.”