Positive Signs in the Housing Market

According to Richard Bove of investment banking firm Ladenburg Thalmann, one of the country's veteran financial analysts, there is a positive dynamic taking shape in the current cycle:

• Bove said he expects “housing prices to stabilize and/or rise (in 2009) after a likely boom in mortgage refinancings as rates fall and loan applications increase.”

• Add in the expected massive economic stimulus package being put together on Capitol Hill with the incoming Obama administration – and there's a good chance we're going to see a gradual transformation of the downward cycle into a slow rebound over the coming several quarters.

• Mortgage rates continue to hover at 50-year lows – 5% and even 4.75% for 30-year mortgages, and still lower for 15- and 20-year mortgage terms.

• There are signs that housing prices are stabilizing in some parts of the country. The latest monthly Federal Housing Finance Agency index found home prices up by 0.6% in the Mountain states and by 0.2% in New England.

• We're all paying a lot less at the gas pump, and sharply discounted prices for retail goods and autos.

• Americans are actually saving again, the national savings rate took a nearly 3% jump last month. That might sound small, but it's hugely important if it is the start of a trend.

Keep your eyes open for the small positive signs that are accumulating out there … because all down cycles tail off and come to an end.

From: http://realtytimes.com/rtpages/20090106_realestateoutlook.htm by Kenneth Harney, Realty Times, Jan. 6, 2009