This is “THE” money question. If you can accurately predict this- you are the man, no doubt about it. News Flash! Nobody can predict this information, not even Yale Economists. What we can do is gauge the economy and the health of the real estate market by the economic data that we receive on a daily basis.

There are two huge factors at work here that will keep housing prices low moving forward. These two factors are none other than unemployment and job growth. These are the single most two most important factors that support a rising home prices.

Housing prices will come back when jobs and unemployment are in sync.

Rising home values are determined by strong market competition, which means droves of people would need to start buying again. For this to happen, there needs to be a increase in the expansion of credit giving financial ability to buy. The overwhelming population of potential home buyers need mortgage financing. In order to procure mortgage financing, you need to have stable income and/or stable employment.

You’re probably not going to be thinking about purchasing a house if you’re worried about losing your job, am I right?

Ok.

Personal incomes and job stability drive housing prices. People make high ticket purchases when they feel comfortable about their finances and their long-term affordability. If people don’t feel comfortable about their household cash flow, buying a house takes a backseat and housing prices remain low. Sound familiar?

Another factor to consider is unemployment is still very high. A whopping 9%.

Unemployment is defined as people who have been laid off from their jobs, are receiving monthly unemployment benefits and who are actively looking for a job.

Unemployment does not take into consideration people who are not receiving benefits actively looking for a job. What does this mean? It means that the 9.1% unemployment rate is artificial.

The real unemployment rate is probably somewhere around 12%.

This doesn’t spell good news for an increase in housing prices.

Let’s be realistic: to gain consumer confidence in housing, unemployment needs to drop compelled with beefy job growth. If we have those two factors working for us, it would be a safe assumption that we can see housing prices start to rise in value. We don’t know when this will occur, but we know what factors have a strong influence on housing prices.

Can housing prices slide further? This is a question best served by addressing local markets because each local sector of the real estate market is uniquely different. For Sonoma County, most argue Sonoma County is a very stable real estate market.

Here the opportunities available for folks who are not concerned about their jobs and are comfortable with their household income and cash flow.

Buying a home is a very smart financial move right now. Home prices have never been more affordable for many families.

By the way, did I mention there is 100% financing available in certain areas? There is!

Refinancing a home you already own is another opportunity available in the marketplace today. If your loan is owned by Fannie Mae or Freddie Mac you can refinance up to 125% loan to value and may not need an appraisal.

If you have the cash, you can purchase a house in full, and rent the property out for income. You can immediately refinance the house and pull that cash out and mortgage your cash-back, via the new delayed financing rule.

We don’t know when housing prices are going to come back.

We do know the opportunities available in the market for folks savvy enough to capitalize on them. If you would like to discuss mortgage rates or perks in buying a house feel free to contact us. We can discuss when housing prices will come back.