Kitsap Real Estate Market Report - March 2011
By Admin
Below is a segment of our March Newsletter at Prowserealestate.com
US unemployment finally appears to be starting to improve, the unemployment rate dropping last week to 8.9%. A projection by the Congressional Budget Office (below) shows an expected gradual improvement of about 1% per year over the next 5 years. Many aspects of our economy are improving, as evidenced by improvements in truck tonnage, rail shipments, industrial production, personal consumption expenditures, and GDP measurements. Still America’s housing market remains in low gear, with new home sales near historic lows, residential inventory high, and sales volume and prices falling. Though the number of new mortgage defaults appears to be dropping, there is still a large shadow inventory of distressed properties not yet for sale or in foreclosure.
Government efforts to provide relief for distressed property owners have for the most part fallen short, though there are currently negotiations between states attorneys general and mortgage servicers to determine changes in mortgage servicing to prevent further foreclosure documentation problems. Last month the Department of the Treasury released their plan to reform housing finance, including the eventual unwinding of Fannie Mae and Freddie Mac, the agencies that currently purchase and securitize most of the loans to purchase residential real estate. Among other provisions, the plan to wind down these agencies is scheduled to reduce the conforming loan limits by October 1, 2011. FHA loan limits are to be reduced at the same time to ensure that buyers requiring larger loans do not switch to FHA. Another aspect of financial reform is for banks to implement the Basel III Capital Accords by substantially increasing the amount of capital (equity) they hold on their balance sheets. Within the US, a number of prominent economists continue to press for a stricter standard than agreed in Basel III, in particular that much higher capital requirements are necessary to eliminate the problem of “too big to fail”.
All of these factors, plus the turmoil in the Middle East and rising oil prices, have left buyers and sellers in our local markets uncertain of future trends and reluctant to commit to real estate purchase contracts. Though few buyers are moving forward, a survey discussed on the John Burns Real Estate Consulting web site shows that 88% of 10,000 buyers surveyed thought that now was a good time to purchase a home, as well as describing some things current buyers are hoping to find in our market.
See rest of newsletter.
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