With the autumn months upon us, many people are putting their homes on the market in hopes of finding buyers. With mortgage rates at historic lows and falling home prices, there is a good supply of buyers that are looking to jump into the housing market to find the home that they have been looking for. Despite all of the uncertainty, however, there are some trends you can expect to see in the housing industry for the upcoming season.
1. Mortgage rates are probably going to stay low. Today’s mortgage rates are at historic lows and many analysts predict that they will stay near the current level for awhile, but not for too long. Some mortgage experts expect the rates to stay at these record lows at least through the end of 2011. If the economy begins to improve in 2012, the rates may increase slightly. But with more than 14 million people unemployed and the Federal Reserve indicating plans to keep the Fed Funds rate at 0 until 2013 and engaging in the “twist” to lower long term rates, it will be awhile before mortgage rates increase dramatically.
2. Loan qualifications will still be strict. Although mortgage rates will probably remain very low, it’s still going to be difficult to qualify for a mortgage. If your credit history has some blemishes, you will need to have a significant down payment in order to qualify for a mortgage or take some extra time to build up your credit score. Lenders are still being criticized for their past actions which resulted in the housing crisis which has been going on for a few years and they are not going to go back to their old ways of subprime mortgages and approving home loans for people who cannot afford the payments anytime soon.
3. More people will be renters. Since a large number of homeowners who go through foreclosure are not eligible for another home loan for several years, many of them become renters. As a result, individual and group investors are buying up foreclosed homes and turning them into rentals instead of fixing them up and trying to sell them for a profit. The Obama administration is also jumping on this idea as the Federal Housing Finance Agency has requested ideas for programs that can efficiently turn foreclosed properties into rentals.
4. There are going to be more foreclosures occurring. The foreclosure crisis is not even close to being over. Although the number of foreclosures seems to be dropping, the inventory is actually predicted to rise. The reason is because it takes banks so long these days to “catch up” with homeowners who have not made their payments in awhile. In some cases, homeowners have not made a payment for a year or more and they are still in their home because the banks are so far behind on foreclosing on properties. In addition, there will probably be an increase in short sales, which means this upcoming autumn season may be the best time to get a great deal on a home.
The predictions for the housing industry trends for the next few months are not surprising. Fortunately, despite some of the bad news is balanced out by some good news between now and the end of the year. It will be interesting to see what 2012 brings in the mortgage and housing industry.