Where Portland Housing Is Headed

dice.jpg We received an important indiator of where housing is headed last month, when new mortgage applications for home purchases and refinances suddenly surged as they hadn’t in months. Applications for FHA loans to buy houses were up by 10.4 % and overall home purchase application jumped by 7.1 %.

Meanwhile, mortgage interest rates dropped to their second lowest level in nearly two decades, according to the Mortgage Bankers Association. Thirty year fixed rates averaged 4.96 % and the fifteen year rate dropped to just 4.5%.

Why is this important? New financing applications to buy homes obviously point to rising purchase contracts and closed sales in the months ahead. They also suggest that prices have hit a level in many markets that is attracting once-hesitant buyers off the sidelines.

There’s still another factor that’s likely at work here as well: Congress’ recent improvements to the home purchase tax credit – pushing it to $8,000 from $7,500 and making it non-repayable. George Ratiu, Research Economist for the National Association of Realtors says that the big jump in loan applications could be tied to the improved credit in the stimulus package signed last month.

But, let’s be clear here. A rise in home purchase applications does not suggest we’ve turned the corner in the cycle or have solved the multiple challenges facing markets around the country – high foreclosure levels, continuing domination in some areas of REO and short sales, and continuing increases in the unemployment rate can keep us on our toes.

April 11, 2009 · Filed Under Uncategorized

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