House prices up in March

Informed · Joined: 23 Mar 2009 Posts: 12

Nationwide today said that average property prices increased in March by 0.9%, the first rise since October 20078.

However Fionnuala Earley, Nationwide's chief economist was quick to dampen any thoughts of a recovery, stating "it is far too soon to see this as evidence that the trough of the market has been reached" and that quantitative easing and low interest rates would take more time to filter through the economy and lead to a sustained recovery in the housing market.

This will still come as positive news to anyone who currently owns a house and has been watching their equity gradually drain away. Combined with news that buyer interest is up and mortgage loan approvals on the rise, it certainly paints a prettier picture than some of news over the past year.

Allen_B · Joined: 01 Apr 2009 Posts: 16 Location: California

I wouldn't break out the champagne just yet. The wave of Option Arm loans are due to reset over the next 24 months and is going to be a much larger problem then the subprime mess of last year.

m2c · Joined: 03 Aug 2005 Posts: 937

I assume you mean the “end of five years” issue. Don’t know if the “state of LIBOR” (or COFI or whatever) might mitigate the “problem”. I projected at a constant LIBOR since inception of the loan (invalid assumption) and get a 32% +/- if the minimum payment at 7.5% caps were taken. Not awful given the free ride for the first 5 years. On the other hand what fool would not have made higher payments or periodic large payments once the “truth” was all over the gossip columns. Even if the OpArm was taken by someone for whom the loan was not designed (heavy periodic bonus earner or well-healed investor I see as logical target for this product), think they would have changed their payment pattern after learning about the joys of negative amortizations after their first year-end statement.

Never liked the loan for the combination of blue-collar clients and modest home appreciation in my area, so I don’t have any real-life examples to review but I suspect the result is not going to be as heavy as played by the media. You guys in CA would have more empirical data.

Kewlieo · Joined: 06 Apr 2009 Posts: 2

You will find that this may just be a glitch in the system at the moment, there is no reason for house prices to rise in the current circumstances of the economy. House prices really only go up when people can afford them and then take out a relaxed mortgage, which as we all know now is not a easy option anymore.

Sadly we have got to hit a rock bottom before we can start to see a real rise in prices, we just have to hope that is not going to come too late and that the problems that we find ourselves in do not take us back things to far back.

KathrynV · Joined: 06 Apr 2009 Posts: 2

I think it's true that housing prices are slowly starting to go up although it's going to be a long time before we actually see a serious rise in value. Because of improved mortgage rates, people are finally starting to bid on houses again and that demand is increasing competitive prices in many markets but it will require a true improvement in the economy to see things really start to change.

Jenie0109 · Joined: 27 Jan 2009 Posts: 307 Location: chicago IL

i agree with you.