Upbeat Housing and Mortgage News

Much positive news has surfaced thus far this week, hopefully signaling a turning point in what has been a rough market. Two news bits should help brighten housing sentiment.

1. Housing Starts Jump in February - construction of new homes and apartments jumped 22.2 percent in February compared with January. Furthermore, starts rose almost 80 percent on buildings of five units or more. This makes sense to me as investors are coming out from everywhere scooping up multi-family homes. A friend of mine recently purchased a new multi-unit piece out in Newark for, what he considers, “a steal”. And if you run through the numbers, he does have a point.
2. Treasury to buy up Securities  – The Fed’s plan to buy up to $300 billion of long-term government bonds and $750 billion in additional mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac should drive down mortgage rates to historic lows. Analysts, and myself, are expecting average rates to be near 4.50%. Expect a lot more homes to be purchased and a lot of refinancing. If you couple this move with the $8,000 tax credit for new home-buyers (something I’ll clarify the specifics on later), you will see a decline in the rate home values are falling, and maybe even a bottom.