The Housing Market is Back Thanks to Affordable Home Prices and Low Mortgage Rates Today
The housing market is making a comeback after the worst bust since the Depression of the 1930's, thanks to low mortgage rates today and more affordable homes. Owning a home was the American dream for most people but that dream turned into a nightmare for millions of homeowners during the housing bust and owning a home wasn't the most important thing Americans wanted.
Times are changing again as headline after headline is showing a positive turn for housing. The number of home sales is going higher and home prices are also moving up. The turnaround is quite remarkable as attitudes towards owning a home are also changing as more and more Americans become more confident in the housing market.
A recent CNBC All-America Economic Survey showed the desire to buy a home is growing each month. The percentage of Americans in the survey who say owning a home is an essential part of the American dream is at 79 percent - a three year high. There has also been an increase in the percentage of Americans who say it is better to own than rent. The percentage who believe buying is better than renting grew by four points to 69 percent.
Americans also believe home prices are moving higher. In March, the percentage of Americans who believe home prices will increase next year are 33 percent, up 9 percent since November's survey. If Americans believe the housing market has bottomed out, they will be more inclined to buy a home now rather than later.
Rising home prices combined with mortgage rates that are near the lowest point in 60 years is luring buyers back into the market. Today's mortgage rates on 30 year conforming loans can be found as low as 3.125 percent to 3.50 percent with points. Current mortgage rates on 15 year conventional home loans can be found as low as 2.25 percent with points.
The current inventory of homes available for sale is low and the number of buyers is increasing. For the first time in many years the current housing market is a seller's market. The National Association of Realtors recently reported there are only 1 million existing homes for sale, the lowest point since the top of the housing boom several years ago. During the housing bust, the number of homes available for sale surged to over 3 million.
Home prices have a long way to go before prices are back at the peak of the bubble in 2006. The biggest increase in home prices will probably be in 2012 and 2013 then the increase in prices will return to the historical norm of 2 percent to 3 percent. Mortgage rates also also moving higher but will remain low historically speaking.
Conforming 30 year mortgage refinance rates are expected to stay under 4.00 percent for all of 2013. Next year 30 year rates are expected to also move higher but remain under 4.50 percent. If you're thinking of refinancing your current mortgage you should do so now since rates have bottomed out and are moving higher in the coming years.
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