Folks who live in the Sunbelt and have endured the brunt of the housing crash can be forgiven for chuckling a bit. Home sellers in cities once thought immune to the crisis now find that prices are dropping around them, too.
Seattle home prices are off 31 percent from the top, reports The New York Times, citing stats from foreclosure site Zillow. The site’s top economist figures it will be another 10 percent down for that city — a sharper decline than the 5 percent to 7 percent drop likely for the rest of the nation.
While Seattle suffers, most of the rest of the country will stabilize by year end, reports the Times, citing Fiserv, which produces the S&P/Case-Shiller Home Price Indices.
|A bank-owned home for sale in Las Vegas.
"We're at a period near the bottom but with more volatility than we normally see at this point," David Stiff, Fiserv's chief economist, told the newspaper. "This sort of double dip is unprecedented for housing."
Mortgage rates are rising on their own, which might push some buyers into the market. Nevertheless, several million foreclosures are in the pipeline, sure to keep prices in check in all but a few traditionally pricey markets, such as Manhattan.
The average 30-year mortgage now costs more than 5 percent as the spring home buying season gets under way. Americans seem to be gaining confidence in the recovery, pushing more money into stocks, spending more, and saving less than during the crisis.
Expect 5.5 percent mortgage rates before long, say economists.
"We're turning to a more normal mortgage rate environment, Guy Cecala, publisher of the trade magazine Inside Mortgage Finance told the Associated Press. "That pretty much means the 30-year in the 6 percent range. I don't think rates will be going down."
It probably isn’t helping matters that Treasury Secretary Tim Geithner is shopping a plan to pull the federal government virtually out of the housing finance system. The government currently supports well over 90 percent of all mortgages.
Banking analysts figure the most extreme version of the Treasury plan will add 2 percentage points to the mortgage rate we might otherwise see.
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