Stalling a Solid Recovery

Well I still believe that we have hit bottom but as I said before we will not see a strong recovery til 2012. There are still too many obstacles in the way of any real significant market changes. The biggest obstacle is still the tightest credit market we have seen in years which is keeping many potential buyers from purchasing due to their inability to secure mortgage financing. Even the FHA is about to tighten their lending standards by decreasing the allowable seller's concession which is currently at 6% down to a paltry 3%. Couple this with the increased down payment requirement which went up from 3% to 3.5% about a year ago and now buyers will have to come up with much more money in order to get the FHA mortgage. Home prices are no longer free falling but there are still too many short sales and real estate owned properties coming onto the market which artificially deflates the average purchase price. This trend will continue for another year or two before all the excess non-performing loans are taken out of the market place. A strong recovery will move into place when the amount of foreclosures and short sales start to trickle instead of flood the market. My prediction is that this will happen in the fourth quarter of 2011. Other areas of the country are already experiencing bidding wars on homes and a healthy level of price appreciation. It will take our tri-state area a little longer since our appreciation rates had been driven to unsustainable levels during the years of 2000 til 2005. I am still seeing good buyers getting very good deals on homes that they would never have been able to afford several years ago. The timing continues to be right for those buyers who are able to purchase now.