Housing Market Stabilization
By: Sheldon Levene
Data released this week shows that for the first time in 10 months the median home price across the US rose. Sales are up as the back log of inventory decreased from 9.6 to 9.3 months.
California in particular is showing signs of recovery. Many Southern California counties posted increases in the median home price in June as well as May. The median home price in Orange County, an area devastated by foreclosure in certain areas rose from $300,000 to $320,000. For the first time in over 6 months less than half of the homes sold were foreclosed properties.
The stock market rally continued despite a bad earnings report from tech giant Microsoft. Positive housing data played a key role. It’s too early to tell if signs of housing stabilization will effect tight lending guidelines as skeptics fear a new wave of foreclosures are imminent based on recent defaults.
Many option arm mortgages have payment resets scheduled for the months ahead. These loans were originated between 2004 and 2007. The low payment option resets 4-5 years into the loan to a payment about 600% higher. It’s unknown to what effect these payment resets will have on foreclosures and the housing market.