We could soon be seeing the bottom to the national free fall in home values. Integrated Asset Services’ IAS360 House Price Index released August 11, 2009 shows a 1.2 percent increase in national home prices for the month of June, the fourth consecutive monthly increase. The gains in the second quarter offset the losses in the first. New home sales rose 11% compared in the month compared to May, the third straight monthly increase.
Couple that with the following news:
- At this writing, the Dow Jones Industrial Average is 9157.56, up from 8776.39 at the end of 2008
- The unemployment rate in July dropped from 9.5% to 9.4%
- A June survey for the web site Relocation.com found that half of those who recently moved did so not to cut back but to improve their living situation.
Another factor to keep in mind is the first time home buyer’s tax credit, which offers up to $8000 for a principal residence bought prior to December 1, 2009. Look at how the cash for clunkers program breathed life into auto sales.
The extent of the housing recovery depends on the market. Las Vegas continues to fall. Statewide, 40% of homes in Nevada are worth less than the mortgages on them. Los Angeles prices are 42% below their 2006 peak, yet Cleveland, Dallas and San Francisco showed price gains. Economic forecasters at Fannie Mae and Freddie Mac predict that nationwide for the year, prices will still soften by at least 7% , but that is less than the double digit drop last year.
Homeowners are still facing difficulty. The US Mortgage delinquency rate rose to 7.23% in June up from 7.10% in May, reflecting the fact that the vast majority of homeowners who qualify for mortgage help still haven’t gotten it.
What does it mean if you are having trouble making your mortgage payments? For the first time in years, the numbers offer hope. One of the major attractions of home ownership in this country has been the opportunity to build equity in an appreciating asset. When that prop was knocked out from under the economy, it collapsed.
It’s more important than ever than you make every effort you can to work out an affordable mortgage arrangement with your lender. For the first time in a while, you can take heart that the money invested will ultimately pay off, as home prices turn around. It might take years for your house to regain its 2006 value, but compare yourself to a renter. One I know has paid well over $200,000 since moving into his apartment, but has no equity, nor any hope of ever building it while he lives there.