Most housing experts and economists are agreeing that the housing bust is over. “The market

has turned – at last.” ~ The Wall Street Journal. There is growing optimism for the housing

market in the Summer of 2013.

Most of the major housing indexes have turned positive and have stayed on that upward

trend for months.

The CoreLogic/Case-Shiller Index is

one of the most sourced measures of

U.S. residential real estate prices. It

tracks the values of homes in the top 20

metropolitan regions, as well as

tracking values nationally. The

CoreLogic data has shown average

home prices on the rise since March

2012 in most metropolitan areas. Most

recently, areas that were the hardest

hit have shown the largest year-over-

year price increases: California - 20%,

Arizona - 17% and Nevada - 26%.

In April 2013, home prices saw a 12.1%

rise, the highest year-over-year

increase in 7 years. Most housing

experts attribute this to low inventories

and increased demand. This lack of

inventory is affecting the building

market...

Home Building is beginning its

recovery. New home sales hit a 5-year

high this summer. For the last six

quarters, home building alone is

responsible for 20% of GDP growth,

according to NAHB, National

Association of Home Builders. As a

result of this growth in home building,

the housing industry's overall share of

the economy is increasing slowly back

to historic norms. This, in turn, is

adding to job growth.

The National Association of Home Builders/Wells

Fargo builder sentiment index has risen above 50, the

level which indicates more builders view sales

conditions as good, for several quarters, with a jump

to 57 in June. This is the highest it has been since

January 2006.

According to the National

Association of Realtors, NAR, home

sales in May of this year increased

above the 5 million number, which

had not happened since July 2007.

Challenges and Changes in Today's Real Estate Market

Every market has it's challenges, whether a buyer's market, a seller's market, or those real

estate markets that are in transition. Sometimes, the challenges are in appraisals, lack of

inventory, distressed housing, or in financing. Whatever they are, the market eventually

recovers. We're now seeing the market recover from the effect of distressed properties, or

short sales and foreclosures.

Although the number of

mortgage defaults has

been decreasing over the

last several months, there

are still a great number of

distressed properties out

there today, both short

sales and foreclosures.

Banks seem to have

learned their lesson and

are not dumping bank

owned properties on the

market at once, but

releasing them gradually.

Hedge fund managers are buying homes in bulk, like a financial instrument, especially in

states that have been hit the hardest in the crash. These investors are looking for long-term

price appreciation and will most likely rent the homes, doing minor repairs, then sell when the

market will return a profit. It would seem that Hedge Fund investors certainly are betting on

the return of the housing market!

Although the words "hedge fund" may bring negative connotations to some, these investors

are actually helping the real estate market by scooping up large portions of the distressed

inventory in many major markets. This reduces the surplus and reduces neighborhood blight.

You would think that there

would be more

foreclosures on the

market... in our market,

for instance, less than 1%

of the listings are bank

owned properties. The

answer might be that

private equity firms are

buying up huge numbers of

single-family houses and

turning them into rentals,

or flipping them.

Goodbye Fannie, Goodbye Freddie

Five years after the $190 billion bailout and the

Conservancy of Fannie Mae and Freddie Mac,

Congress and the Administration have started to

address the issue of housing reform this year. Both

sides of the aisle and both the House and the Senate

are working on bills that call for the disillusion of the

Government Sponsored Entities, or GSE's.

While both parties agree that Fannie and Freddie are

outdated models that don't work anymore, as you

may expect, the differences lie in how much of a roll

the government should play in the housing and

mortgage industry. Many believe that the

securitization of mortgages by these GSE's has

increased the housing financial industry in a way that

private companies could not accomplish, while others

believe that they created, or at least contributed to the

troublesome bubble in the first place.

Either way, all parties seem to agree, for now, that

Fannie Mae and Freddie Mac will be phased out,

probably within a five-year timeframe, and be

replaced with more modernized organizations which

will still support the housing market, and encourage

home ownership for as many Americans as can

reasonably afford it. What exactly those will look like,

will be played out in the next few months. We might

even see this reform by the end of this year, or the

beginning of 2014.

Is it Safe to Venture Out into the Real Estate Market Again?

Since the Great Real Estate Bust of '06,

we've seen many swings in the real estate

market. First we saw buyers leave the

market in larger numbers, watching home

prices fall like Newton's apple. Then we saw

home sellers with their arms crossed in

stubborn denial, their homes languishing on

the market for 1, or even 2, yes, and even 3

anniversaries. Good news... it looks pretty

safe again out here!

Just recently we've seen first-time buyers

back in the market, and some move-up

buyers, ready to take advantage of the

historically low rates and the circa 2002

home values. Here's the positive truth...

people become adults, start families, and

want to buy houses. We call it the "Circle of

Life"... real estate life, that is. Experts might

call it "Pent-up Demand".

Supply and Demand

After hitting bottom in the fall of 2012, interest rates have started to increase, although gradually. We

also saw the bottom of the market as far as home values in most communities around the country. While

there are locations and price points that are still seeing falling values, most are seeing the bottom in the

rear view mirror.

With a lack of equity in their homes, many homeowners still cannot sell. The lack of inventory in many

markets is evidence. However, this lack of active listings added to the increased demand has resulted in

rising prices. As we see values increase over the next year, we will see more homeowners above water on

their mortgages and able to sell. We expect more move-up buyers able to enter the market as this upward

cycle continues. However...

As the economy heats up, we will see

rising interest rates. The cost of

buying a home will increase, thereby

decreasing the purchasing power of

home buyers. When the real estate

market is on the upward climb, the

question for buyers is always this: buy

now, when I have fewer choices, or

buy later when interest rates are

higher and I can afford less?

Consumer Confidence On the Rise

As the real estate market continues on its path of recovery, more and more people are gaining

confidence and entering the market. Rising rents are making the thought of a home purchase

more attractive to many. If you're thinking of getting your feet wet, this is certainly a good

time, with low interest rates and home values just beginning to rise.

Search for Homes for Sale in Frederick Md * Frederick Real Estate Online

Home ownership has proven to be the biggest and safest investment most people

will ever make... as long as they stay in it for the long haul. It just might be time

to dip your toe in the water again. If so, consult your local RealtorR today!