The prices of homes in January fell to the lowest point in 10 years. However, the good news is that this low in housing has helped boost home sales. Although there is still a number of unemployed, housing is getting to the point that we need to ask ourselves, how much more downside are we going to see?
According to the National Association of Realtors, the median price for January fell 2% from December to $154,700. This is the lowest number that we have seen since November 2001. Shortly after that time housing began to rise and ultimately create a bubble.
As I said before, the good news is that housing sales are picking up due to the incredibly low prices. Housing sales have rising three out of the last four months and the annual sales pace for housing came in at 4.57 million homes. Another reason for these sale increases is the fact that mortgage rates are extremely low. However, haven’t we learned our lesson on giving an individual a mortgage that has little or no income?
At some point, there will come a time when housing prices just can not fall anymore. When that will be is anyone’s guess. The sentiment from home builders and some fund managers seems to be upbeat and expecting housing to rebound later this year or early next year. However, there is still some issues that need to be taken care of before housing can truly rebound. The biggest factors for a housing rebound are jobs.
If we have a jobs recovery, a housing recovery will follow. The simple answer is that jobs provide people with money. Once people get money they want to increase their standard of living. Maybe you want to start a family and have a house with a white picket fence. They then shop for a home and ultimately get cheap mortgages to help finance the purchase.
Housing is getting much better, that we can say. Can we go as far as to say that housing is recovering? I wouldn’t say that yet because there are still quite a number of homes for sale and the unemployment rate is still high. Once we start to see unemployment start to go down, I believe we can then start looking for a recovery. However, there are other factors that go into this than jobs. The bottom line is housing is starting to get so cheap that people want to take advantage of the low prices. This will help boost sentiment and home sales but do not expect a recovery soon.