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...Is the housing market anywhere close to starting a climb out of its doldrums?
Recent developments offer encouragement.
When the Federal Reserve announced last week that it would print $1.2 trillion to juice the economy, mortgage rates, which had already dropped, fell to historic lows. Rome bankers and real estate agents reiterated that now is a great time to buy a home.
Prices are low because of a glut of existing homes and the large number of foreclosed homes. In February, nationwide sales of previously occupied homes increased by the largest amount in six years. (First-quarter home sales for Rome will be tabulated soon.)
An $8,000 tax credit is available this year to first-time homebuyers and buyers who haven’t owned a home in three years. The tax credit does not have to be paid back.
When Treasury Secretary Timothy Geithner announced Monday the government would team with investors to buy as much as $1 trillion of bad assets from banks that have been reluctant to
While mortgage rates are at historic lows, the asking price has been reduced on a Colonial style home at 312 E. Fourth Ave. (Bryant Steele / Rome News-Tribune) |
make loans, Wall Street reacted positively. The Dow Jones industrial average rose almost 500 points. The action is intended to improve large financial institutions’ capital situations and encourage them to begin lending.
Finally, spring is here, usually a harbinger of home buying.
Yet unemployment continues to rise, largely affected by housing-related industries. And the good news about February home sales is diminished by the fact that sales of existing homes remain their lowest in more than a decade. Consumer confidence is at its lowest since the index was conceived in 1967.
Still, economic analysts are virtually unanimous in saying economic recovery must begin in housing.
Cautious encouragement
“We’re definitely seeing an increase in the number of calls and other agents showing more of our listings,” said Graham Dixon of Lambert, Dixon & Tate and president of the Greater Rome Board of Realtors. “The $8,000 tax credit will help, too.”
“There’s definitely some activity,” agreed Mark Brewster, owner and president of Garden Lakes Realty. “It’s really picked up in the first quarter of ’09 compared to the last three months of ’08.”
Dixon said the combined efforts of the Federal Reserve and the Treasury Department should help.
“One reason we’re seeing an increase in interest is the low interest rates,” Dixon said. “But part of our problem now is lenders are so much more restrictive, even if you have someone who is dying to buy a home. Whereas a couple of years ago it would have been a slam-dunk.
“So I think as (banks) increase their capital, it will be a great boost. Eventually, banks have to lend to make revenue.”
Brewster said a lot of interest from buyers now is in “foreclosures that are saturating the market. The good side to that is seeing people buying up foreclosed homes. That’s the first step to healing the market — get (those properties) off the books.
“When that stuff gets taken up, we’ll see some existing home sales start to go.”
“I think we will see it pick up in the spring,” Dixon said. “Typically, the first quarter is slow, and then it picks up. People start getting their tax refunds, school’s out, the weather’s nice so people are out seeing (for sale) signs. They get into the whole spirit of home buying.
“It may not pick up as much this year as in the past, but it will pick up.”
Brewster said, “Buyers are expecting deals, and for good reason. There are good deals out there to be had. That’s part of the process, part of the healing of this market. I think that will continue.”
Pear Alley thrives
A successful housing project may have been helped by the market downturn, its developer says.
Pear Alley, which sits off Glenn Milner Boulevard overlooking the Etowah River, is almost fully occupied. One lot has been reserved for the future, and construction will begin soon on the final lot. Nineteen homes have been sold.
“It might have been helped by the market downturn,” Josh Tullis of Pear Alley Associates LLC said. “It represents a return to core values, its location, a collection of different factors.”
Pear Alley homes blend in with the downtown look but offer modern amenities.
Despite Pear Alley’s filling up, Tullis said, “We’re all banking on the return of the market. With the rise and fall of zero-down financing and tightening of credit markets and higher unemployment, … just being able to hit the bottom is good news. To know you’re at the bottom and things will go back up.
“To be able to say ‘we survived,’ that’s what everybody is hoping for, and that (the market) returns very quickly.”
Click to see the previous report "Mortgage interest rates continue to inch downward."
