Equifax

Finance Blog

Signs of Life from a Struggling Real Estate Market

Written by Ilyce Glink on March 2, 2012 in Real Estate  |   No comments

Despite a slight decline in property values month-to-month, industry experts are cautiously optimistic that the housing market will continue its slow recovery. Low mortgage rates, combined with positive outlook reports from Fannie Mae and Freddie Mac and improving unemployment numbers, lead many to believe we’re…

buying a home real estateDespite a slight decline in property values month-to-month, industry experts are cautiously optimistic that the housing market will continue its slow recovery. Low mortgage rates, combined with positive outlook reports from Fannie Mae and Freddie Mac and improving unemployment numbers, lead many to believe we’re on the right track toward more Americans buying a home.

But we still have a long way to go.

In late February, the Federal Housing Finance Agency (FHFA) released the seasonally adjusted purchase-only house price index (HPI). According to the FHFA report, seasonally adjusted home prices fell 2.4 percent year-over-year in the fourth quarter (Q4) of 2011, despite little change from November to December of the same year.

Andrew Leventis, principal economist at FHFA, believes there’s a silver lining: “While FHFA’s national index shows a two percentage point price decline over the latest four quarters, 12 states and the District of Columbia posted price increases [year-over-year]. When coupled with the fact that about half of all U.S. states saw price increases in last quarter, this growth adds to mounting evidence that real estate markets are at least seeing some signs of life,” he said in a press release.

Fannie Mae shares Leventis’s cautious optimism, according to its recent economic and housing outlook. Based on three consecutive months of increased home sales late last year, Fannie Mae expects housing to add to the gross domestic product (GDP) for the first time in seven years. The addition will be moderate, as continued price declines are expected in the near-term.

“Risks to the forecast are more balanced between the upside and downside since our January forecast,” Fannie Mae Chief Economist Doug Duncan said in a press release. “The economy appears to be more resilient than in previous months, and should be less vulnerable to shocks, including any spillover from the European sovereign debt crisis.”

Fannie’s brother Freddie Mac believes there’s a light at the end of the tunnel, too. Frank Nothaft, vice president and chief economist for the Freddie Mac, sees things taking a positive turn: “The U.S. economy continues to build on the momentum from the end of last year. Our outlook anticipates gradual, but steady, improvement in the economy and the housing market, supported by low interest rates and brightening job market prospects,” he said in Freddie’s press release.

Don’t expect a huge turnaround this year – according to Freddie’s report, a major housing warm up isn’t expected until 2013.

Even so, things are starting to thaw. Home prices are slowly rising in cities hit hard by the housing bubble-burst, and a foreclosure settlement between the big banks and the states means the foreclosure bottleneck should begin to clear. This will probably contribute to a decline in prices in the early part of 2012, but the quicker we get rid of them the sooner we can begin a true housing recovery.

It’s great to see experts feeling more positive about the housing market, but until consumers feel the same way, it will remain stagnant. The good news is that jobless claims reached their lowest level since 2008 in February, and unemployment fell to 8.3 percent. If those trends continue, would-be homebuyers could begin taking advantage of near-historic low interest rates. We won’t see a housing market like the one we saw during the housing bubble any time soon, but hopefully we’re past the worst of it.

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.

No comments yet


Leave a Comment


Name :


Commenting guidelines

We welcome your interest and participation on this forum, but be aware that comments will be published at Equifax's sole discretion. Please don't use this blog to submit questions or concerns about your Equifax credit report or raise customer service issues. Instead, you should contact Equifax directly for all such matters and any attempts to do so in this forum will be promptly re-directed.

Some other factors to consider when commenting:
  1. Registration and privacy. While no registration is required to visit our forum, participants wishing to post a message must register by creating an account. All personal information provided by forum members incident to registration is governed by our Terms of Use and Privacy Policy.
  2. All comments are anonymous. We'll delete your name, e-mail address, and any other identifying information, including details about your investments.
  3. We can't post or respond to every comment - As much as we'd like to, we can't post every comment, nor can we guarantee that we will respond to each individual message. All questions or comments about your Equifax credit report or similar customer service issues should be handled by contacting Equifax directly.
  4. Don't offer specific legal, tax or financial advice. All of the materials on this Site are for information, education, and noncommercial purposes only and this forum is not intended as a means of expressing views or ideas regarding any specific legal, tax, or investment advice. While offering general rules of thumb is both permitted and encouraged, recommending specific ideas or strategies regarding investments, taxes, and related matters is prohibited.
  5. Credit Repair. This blog is not intended as a venue for the discussion or exchange of ideas regarding credit repair or other strategies intended to assist visitors and community members improve or otherwise modify their credit histories, ratings or scores.
  6. Stay on topic. Your comment should be concise and pertain to the specific post in question.
  7. Be respectful of the community. The use of profanity, offensive language, spam, and personal attacks will not be tolerated and egregious or repeat offenders will be banned from future participation. We encourage disagreement and healthy debate, but please refrain from personal attacks on our WordPresss and contributors.
  8. Finally: Participation in this forum may be terminated by Equifax immediately and without notice for failure to comply with any guidelines or Terms of Use. As such, you should familiarize yourself with all pertinent requirements prior to submitting any response through the blog or otherwise. All opinions expressed in this forum are solely those of the individual submitting the comment, and don't necessarily represent the views of Equifax or its management.

Equifax maintains this interactive forum for education and information purposes in order to allow individuals to share their relevant knowledge and opinions with other members and visitors. We encourage you to participate in discussions about personal finance issues and other topics of interest to this community, but please read our commenting guidelines first. Equifax reserves the right to monitor postings to the forum and comments will be published at our discretion. Do you have questions or comments about your Equifax credit report or customer-service issues regarding an Equifax product? If so, please contact Equifax directly. All opinions and information expressed or shared in blog comments are solely those of the person submitting the comments, and don't necessarily represent the views of Equifax or its management.


Real Estate Archive

Stay Informed Sign up for our FREE Equifax email Newsletter