Is Housing Nearing Bottom?

May 2, 2009 - As the housing market slowly moves closer to bottoming, rates on 30 year fixed rate mortgages tied a record low this past week.
Average rates on the 30 year fixed rate mortgages fell to 4.78%. A year ago average rates were 6.06%. A considerable difference for any borrower. A new 30 year fixed rate mortgage taken today could mean a savings of $165 monthly or close to $2000 a year.

Inventories are dropping as homes have become more affordable. Recently inventories of single family homes month to month in certain areas of South Florida that I like to watch closely have declined by 30% or more.As availability declines and prices begin to stabilize, lower more affordable mortgages are attracting more buyers.

Some REO or bank foreclosure inventories still not showing on the market could stall the momentum as lenders again begin to process and place foreclosed inventories on the market. It's my belief that once a bottom is recognized these lenders will indeed flood the market with inventories, creating another round of competition between sellers, albeit on a more even playing field, where pricing is key.

If rates remain low and prices bottom, affordability would than be more related to individual incomes, credit and employment stability. Housing may very well be near bottom. The underlying question may now be - will other economic conditions recover or lag behind housing?