The near and long range prospects for the Crystal Coast real estate market looks very promising. Several key indicators both in the real estate and the mortgage sectors show either recovery or long term recovery solutions in play to what has been a horribly depressed and glutted market place. is the 6-7 years of real estate “funk’ finally over with?
Crystal Coast of NC
Quantitative Easing (QE) is ending in October. QE has been a program in which the Federal Reserve purchased government bonds in an attempt to lower interest rates. The Feds spent/bought up to $85 Billion a month. All told since 2008 when QE started, the government bought approximately $4.5 Trillion worth of bonds. This was done in part to increase consumer confidence and to lower the interest rates for home loans.
Has it worked? In the 6 years since QE was implemented housing starts (new construction) have increased by 56 percent and the average rate for a 30 year mortgage is down 1.9 percent.
“The Fed said it was confident the US economic recovery would continue, despite a global economic slowdown. The targets for inflation and reduction in unemployment were on track, the Fed said in a statement. The central bank, which also said it would not raise interest rates for a “considerable time”, has gradually cut back QE since last year,” reports the BBC.
In short, the Feds plan on hanging onto the bonds it has been buying up therefore keeping the near record low interest rates down low. This is great news for the still rebounding housing industry in the Crystal Coast area.
Freddie Mac and Fannie Mae
The second long term positive indicator is that Freddie Mac and Fannie Mae are expected to loosen the credit requirements for mortgages plus lower the minimum down payment requirement to just 3 percent. Freddie Mac and Fannie Mae are Government Sponsored Enterprises (GSE) that guarantee loans for banks and attach lending requirements to that guarantee. These GSE’s don’t make the actual loan to the consumer but rather insure the bank of the money when the lending institution does makes a loan under the GSE’s standards.
The potential agreement “would allow credit to flow more freely to lower- and middle-income households,” said Mark Zandi, chief economist at Moody’s Analytics as quoted from the Wall Street Journal. “That’s vital to getting the housing recovery moving forward.”
The effects of the QE and the loosening of credit requirements with a smaller down payment requirement by the GSE’s means more people will have access to more mortgage monies than in recent years.
Crystal Coast Patterns and Cycles
When you live on the coast you grow accustomed to patterns and cycles. The weather follows certain annual, 3-5 year, 5-7 year patterns. Fish and wildlife will follow certain, annual, 3-5 year, 5-7 year patterns. So does real estate, or least the observed real estate for the past 12-15 years has.
Let’s use a graphic demonstration of the supply of inventory along the Crystal Coast to highlight the point. The supply of inventory, often times referred to as the “absorption rate” is a key indicator of the health of a marketplace. Expressed in months, the supply of inventory is a formula that takes into account the rate in which homes are sold and the rate in which new homes come on market for sale. In a stable market there should be approximately 6 month supply of inventory. In other words, if no new inventory came on market for sale it would take 6 months to sell everything currently for sale.
Take a look at the graph below. The supply of inventory, a key indicator is showing a decisive turn every 4 years. We are due another change in 2015. What that change will be is not certain. But, looking at home price trends and inventory and considering what the effects of Quantitative Easing and the proposed laxing of loan requirements by Freddie Mac and Fannie Mae, the Crystal Coast real estate market could be re-entering into a time of reduced inventory, increased sales entering into a supply of inventory resembling that of the pre-real estate boom times.
Yes, finally! Carteret County and all of the Crystal Coast just might be returning to a normal and stable market place!
Contact Margaret Hitchcock of Hitchcock Realty today at (252) 269-2893 for more information about the Crystal Coast and the surrounding area. She is a real estate professional, a Realtor with many years of experience! Margaret is highly trained and qualified at finding the property that is just right for you!
The Crystal Coast of North Carolina is comprised of the following towns and municipalities: Morehead City, Beaufort, Atlantic Beach, Emerald Isle, Cape Carteret, Davis, Otway, Cedar Island, Harkers Island, Cape Lookout, Bogue, Swansboro, Havelock, Cherry Point, Stacy, Sea Level, Pine Knoll Shores, Bogue Banks, Fort Macon, Indian Beach and Cedar Point