This past week, Freddie Mac predicted that 2011 will see a 5% increase in home sales over 2010 in its April U.S. Economic Housing Market Outlook. Wrapped within prose about spring arriving and cherry blossoms blooming, the basis for this optimistic forecast is the fact that unemployment declined for the 4th straight month, and that real estate employment was up 10,000 jobs since November 2010.
Housing starts, which had a very small increase in 2010 levels when compared to 2009, are predicted to slowly gain ground throughout 2011, with a larger jump in 2012.
Buyers opting for a 15 year mortgage vs. a 30 year mortgage are able to save about 0.75% on their interest rate, according to bankrate.com, but most homebuyers still opt for the longer 30 year instrument.
A homebuyer with a $165,000 mortgage and a 30 yr. term at 4.85% will make total payments of $313,448.95 over the life of the loan. The same mortgage amount with a 15 year term and an interest rate of 4.10% will pay a total of $221,178.62, a savings of over $110,000. Both presume no additional payments and all payments made on time.
It remains to be seen whether this forecast will pan out, but in my market much tighter lender requirements combined with lower appraisal values and more underwriting requirements are making it tough for many first-time homebuyers to successfully get through the home buying process.
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