Prices are now up almost 4 percent from the bottom in May 2009, but off 30 percent from May 2006, largely considered the peak of the housing boom. The 20-city index was off just 0.7 percent from this time last year. The smallest decline in almost three years.

Case Shiller index tells us we are in a bottoming process, where prices will continue to stabilize and attract buyers. However the paper economy chart, comparing the 1990s housing bust to the present makes two points vividly. First, the size of this decline and second, the 1990s bust took eight years to return to normalcy, measured from peak to peak

Fed says goodby to MBS
Interest Rates Going Up
The Fed has been the lender of last resort, buying up paper nobody wanted, providing liquidity to mortgage-backed securities and keeping the whole thing afloat. However, the Fed declares this a self sustaining recovery and financial markets stable and profitable. Private investors, willing to purchase government backed mortgages will requrie higher rates. Its not clear to anyone how much of this mortgage backed debt is viable. Investors will require higher rates for mortgage backed securities to look attractive. Mortgage Bankers association predicts  6% rate  years and NAR looks to 6.5% in 2011

Fed says Goodby To Tax Credit
Sales Driver

The homebuyer tax credit that gives first time home buyers up to an $8000 tax credit and repeat buyers up to $6500 is set to expire the end of April.  You must be under contract by April 30th and close by June 30th to qualify. In the short term the homebuyer tax credit and spring markets are bringing buyers to the table. MBA Purchase Applications index rose 6.8% for the week, confirming solid activity.

Fed Says Hello Sustainable Recovery 

The economy remains in a transitional phase from a period that depended on support of public sector programs to a period of resumed growth based on private spending, aqccording to Dennis Lockhart President of the Atlanta Fed President. Read we are off the lifeline and looking to the markets to gradually act more normally.

We created jobs! First time in two years, True a total of 160,000 jobs (including temp jobs) is a far cry from the 8 million we have lost, but its solid proof that we are on the right road.

Rising home prices also could boost consumer optimism. with the tax credit program ending we will likley see lower home prices and higher sales volumn. Prices are reaching equilibrium in some parts of the country, according to moodys.com. Looking at the 1990s-era comparison, even after prices stabilized, housing had a long slog ahead. Our economy is driven by consumer spending, so high unemployment means less consumer spending. 

Home prices and sales volume will be held hostage to the economic recovery and will begin in earnest when job creation does so. On a positive note, with big headwinds in front, we are at the beginning of a long term healing process.

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