There was an interesting article by Alan Heavens in the Philadelphia Inquirer the other day about the state of the mortgage business. Here is an excerpt:
Lawrence Yun, senior economist for the National Association of Realtors, agreed that widening credit availability would help turn home sales around.
“Conforming loans are abundantly available at historically favorable mortgage rates,” Yun said. “Pricing has steadily improved on jumbo mortgages [over $417,000] since the August credit crunch, and FHA loans are replacing subprime mortgages.”
According to Freddie Mac, the 30-year fixed interest rate is hovering around 6.5 percent, and short-term rates could back down a bit in the next couple of months, depending on what the Federal Reserve’s Open Market Committee does when it meets Wednesday and Thursday.
Financial markets are “looking for about a 30 percent chance of a 25-basis-point rate cut rather than the 50 percent chance that they had previously expected,” said Frank Nothaft, Freddie Mac’s chief economist.
On the positive side, Yun said, “speculative excesses have been removed from the market, and prices remain near record highs, reflecting favorable mortgage rates and positive job gains.”
“All real estate is local,” he noted, “with naturally large variations within a given area.”
A few municipalities - Haddonfield and Camden, for example - saw sales and median prices increase in the third quarter of 2007 from the same 2006 period. But sales were lower in most communities, while median prices were up or level with the 2006 third quarter.
One continued positive is this area’s condo market. According to Delta Associates of Alexandria, Va., which tracks the Middle Atlantic region among others, the third-quarter supply of 5,400 unsold units provides a 2.6-year inventory. The city’s ratio is slightly better, 2.5 years.
Still nagging the local market is the absence of first-time buyers, and there are two major reasons for that, local observers said: continuing price increases and fears that financing isn’t available.
First-time buyers “are critical to the health of the market because without [them] current owners who want to trade up to bigger, more expensive houses can’t move,” said John Duffy, broker/owner of Duffy Real Estate in Narberth and Wayne.
Fred Glick, a mortgage broker/Realtor in Old City, said many buyers, especially first-timers, have been discouraged by the subprime crisis and foreclosure fears.
“There is still 100-percent financing available, and with a conventional mortgage,” said Glick, “as well as Fannie Mae and Freddie Mac programs for first-time buyers.”
