Those looking for the “bottom” of the market had better move now!

Recent trends in the housing market are giving off the perception that the market is turning. Prices are low, rates are low, and just today (May 26, 2009), the Consumer Confidence report was strong, indicating that consumers were willing to start spending. The chart below shows the price of homes recently.You can see that from September through December of last year, housing prices plummeted. But what has been going on from December through March show a lot more stability in the pricing trend. Some are calling this a bottoming out. The Affordability Index, shown in the next chart, illustrates how today’s low prices and interest rates are making home ownership so much more affordable.

The next chart is very important. It shows the movement of interest rates since the beginning of the year. You’ll notice that there was a peak at the time that the administration announced that it would start purchasing those “toxic assets”. The market responded with an improvement in rates, but got impatient and clicked back up for a time. Then when the administration finally pulled the trigger on those purchases, we saw a steep decline in rates for an extended period of time.

Here’s why this chart is so important, especially after today’s Consumer Confidence report. Mortgage rates are artificially low thanks to the government. Once the government is comfortable with where we are, they’ll concentrate their efforts on other concerns, like Detroit, Health Care, education, etc. Some of this had ALREADY started. Once this happens, rates will spike up quickly. Interest rate pricing took a large jump up today.

What this all boils down to is something you’ve heard me say if you’ve been keeping up with this blog…..get those buyers who are looking for the bottom of the housing market to get off the fence. Last month, while on the road, I passed out a chart illustrating how waiting for the price to drop and taking a chance that the rate goes up, would result in no change in payment or even an increase. If you didn’t get a chance to see it or need another copy, give me a call. If your customer needs an honest mortgage, have them call me.