From The Associated Press:
The recovery in the housing market is being driven by reduced prices, combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100. That’s down 7 percent from a year earlier and off roughly 2 percent from September.
Many experts, though, predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market. The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.
“The only reason we’re seeing good numbers is because of government policies that are propping the market up,” said Patrick Newport, an economist with IHS Global Insight. “Housing is still fundamentally weak.”
From Time:
Realize, though, that a lot of the sales activity is still happening at the lower end of the market. Sales of properties costing less than $100,000 are up 18% from a year ago, and houses priced between $100,000 and $250,000 have seen a 30% surge in sales. Beyond that, sales dwindle. Homes in the $250,000-$500,000 range are up less than 8%, and sales of residences selling for $750,000 to $1 million have increased just 2% over the past year. Depending on where you stand, you may or may not be seeing a more-robust real estate market.
Two things have been driving sales at the low end. Thing one: first-time home buyers, who represent nearly half of all folks out there buying, according to a Campbell/Inside Mortgage Finance survey of 1,500 real-estate agents. Part of the October surge in sales surely had to do with the impending expiration of the $8,000 first-time home buyers tax credit. That credit has since been extended into next year. Will sales drop off in coming months now that everyone knows they’ve got five more months to lock in those contracts? Very possibly.
That Campbell/Inside Mortgage survey points out something else interesting: that the Federal Housing Administration is guaranteeing about 60% of all first-time home-buyer loans. That’s not necessarily a bad situation if it helps to kick-start private lending, but having the Feds insure such a high percentage of mortgage finance isn’t exact a normal state of affairs, either.”
More subsidized consumption. . .