Monday, July 25, 2011

"Hopeful and cautionary projections"

According to Ron Sparks, Managing Broker of Coldwell Banker Bain, Bellevue, we have the following informative report:

PMI, one of the nation’s largest insurers of home mortgages, recently released a report that contained both hopeful and cautionary projections for the national real estate market. Among the highlights:

Forecasts a 19% increase in 3rd quarter 2011 sales over 2010's 3rd quarter.
Forecasts a 14% increase in 2011 sales over 2010.

Prices increasing marginally by years end, then up 3% in 2012, and another 3% increase in 2013.

On the cautionary side is the anticipated rise of mortgage interest rates. PMI noted that current rates are near 2011 lows (4.66%), but predicted and increase to 5.65% in 2012, and 6.60% in 2013. This means that if homes with identical $400,000 mortgages are purchased, but one is bought at today’s rate (4.66%) and the other at the 2013 projected rate, (6.60%), then the home with the higher rate will cost nearly $30,000 more in payments over the first five years of ownership. A remarkable difference that should be considered when thinking about buying…

On a more local note, PMI reported that in Washington State “seriously delinquent mortgages”, the pre-cursor to the foreclosure process, have increased just 0.02% year over year. This would be highly contrary to the perception that Washington has a burgeoning foreclosure issue on the horizon.

As always, I appreciate Ron Sparks and his market perspective.

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