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Has the Housing Market Finally Hit Bottom?

By Robin Mahle

With historically low mortgage rates and housing prices beginning to level off, has the housing market finally reached bottom?  According to the National Association of Homebuilders’ (NAHB) Chief Economist, David Crowe, housing prices will show little fluctuation and may even post a moderate increase as early as 2011.  However, conflicting data exists within the various national markets, with consumer concerns about unemployment and the overall economy.

The consensus seems to be that the housing market is bouncing somewhere along the bottom, with some positive signs of recovery, followed by marked decline in Builder confidence.

As a potential homebuyer, researching a specific market is perhaps the best plan to assess whether or not an area is indicating an uptick in housing prices, or a decline in foreclosures.  Both are encouraging signs that the market may have reached the bottom. 

So, what does this mean for the average homebuyer, who perhaps has been waiting on the sidelines?  For the first-time homebuyer, housing has never been more affordable.  Those who did not participate in the Federal Government’s Homebuyer Tax Credit Program in early 2010 can still take advantage of low mortgage rates. While banks have tightened their purse strings, it is still possible to obtain a loan.  Good credit and steady employment will likely be the key determining factors.   

For those who are confident in their current employment status and wish to move-up the housing ladder, today’s market may not be the ideal setting.  In an August 2010 Zillow Real Estate Market Report, roughly 21% of homeowners with mortgages were underwater.  This means that even those potential buyers, who have managed to maintain a good credit score and their job, will most likely not be able to sell their homes for the amount of their existing mortgage.  Unless these buyers have the ability to make up the difference between the current market price and the mortgage amount, buying a home may be next to impossible.

Even with all the uncertainty in the housing market, homeownership should still be viewed as a long-term investment.  While many owners are currently underwater, the signs of recovery are evident.  Indicators show that home values will rebound over the next 5 to 10 years and if a homeowner has the ability to stick it out, homeownership remains a top investment decision.

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