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EXCITING NEWS ABOUT OUR
AREA
Real Estate Outlook:
Economy is Growing
by
Kenneth R. Harney
February 7, 2008
Despite a lot of
sobering economic news
for housing and real
estate, there are some
definite positives
taking shape out there.
Pooh-pooh them -- or
ignore them -- at your
own peril.
First, the powerful
combination of fixed
30-year mortgage rates
in the mid-5's and house
prices rolled back to
2003 and 2004 levels in
some areas HAS to begin
attracting the attention
of consumers. That could
happen as early as this
Spring in some local
markets -- or later in
the year, but the buying
opportunities are
undeniable.
Second, despite all the
grim and gloomy
predictions about
recession, the U.S.
economy is still
growing. No question
that rate of growth
slowed dramatically in
the most recent quarter,
but the fact is:
The U.S. economy is NOT
in recession, thanks to
a couple of key factors:
Total employment gains
during the past 12
months exceeded one
million new jobs. That
measure went negative in
the latest month by
17,000 jobs, but the
month before job
creation was UP by
82,000.
Exports-which jumped by
an extraordinary 7.7
percent in the past 12
months -- are fueling
some of that employment
vigor.
Real after-tax household
income rose last year by
1.1 percent. That may
not sound like much, but
in a giant economy such
the United States- it's
good news. In a
recession, that number
would have been
negative.
Now to the housing
market's prospects:
Within the next 10 days
to two weeks, the
President is expected to
sign legislation raising
mortgage limits for the
three most
consumer-friendly
financing programs -
Fannie Mae, Freddie Mac
and FHA.
Home buyers in high-cost
markets will gain access
to much lower-cost
financing compared with
the deal-killing "jumbo"
rates they'd otherwise
have to pay. How big a
difference could that
make?
Compare payments on a
jumbo loan at current
rates of 7 to 7.5
percent to the 5.75 to
6.0 rates they'd
potentially pay after
the legislation takes
effect.
Estimates vary as to how
many sales and purchases
this change will
stimulate, but an
independent economist on
contract with the
National Association of
Realtors puts it at
close to 348,000
additional home sales in
the coming 12 months.
Bottom line here: It's
not all gloomy out
there. There are some
hints of a pick-up on
the horizon -- provided
you're open to seeing
them.
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