Added:
Does anybody remember the old days when home buyers actually made sizable down payments, often 20% or more, when they bought their first house?
New national survey research reveals just how dated and quaint that concept has become in today’s market, thanks to rocketing home prices that have far eclipsed buyers’ incomes and savings.
From mid-2005 to mid-2006, according to a statistical sampling of a representative group of 7,548 purchasers, nearly half of all first-time buyers financed the entire transaction, obtaining mortgages in the full amount of the home price. Also, 30% put down 10% or less.
* First time buyers put 2% down
* Repeat home buyers, using the equity of their prior homes, put 16% down
Bottom line: Leverage in real estate slices both ways. A minimal investment can produce impressive returns if the appreciation tide is rising. But it can also expose you to a negative-equity situation when the tide recedes.
20% down seems like ancient history – By Kenneth R. Harney The Washington Post (by way of the LA Times)
Also:
Federal Reserve Chairman Ben Bernanke on Wednesday provided his latest insights into the housing market as he addressed the Senate Banking, Housing and Urban Affairs Committee.
* Housing slowdown hasn’t hurt the economy: “The U.S. economy appears to be making a transition from the rapid rate of expansion experienced over the preceding several years to a more sustainable average pace of growth … the weakness in housing market activity and the slower appreciation of house prices do not seem to have spilled over to any significant extent to other sectors of the economy.”
* Inventory to normalize in 2008. … the demand for housing is stabilizing “and, again, we won’t know that for sure, I think, until we see sales figures in the spring … The normal is, at least for the last eight to 10 years, four-and-a-half months of homes for sale. And my anticipation would be that we would get back toward that general level by the end of [2008] assuming that demand stabilizes.”
Source: Dow Jones Business News
And:
“With reduced home values, historically low interest rates, and pent-up consumer demand, I think the spring real estate market will be a home run,” Richard S. Fedele, Summit’s chief executive, said in a statement. “We’re now seeing more affordability in the housing market than we’ve seen in years.”
Prediction: “robust” spring housing market – By Chris Reidy, The Boston Globe
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Updated: 1st Quarter 2018
