President Barack Obama said he is “very confident” the administration’s plan to purchase toxic assets from banks will unlock credit markets and that there already are signs of a thaw in the housing market. “This is one more element that is going to be absolutely critical in getting credit flowing again,” said the president and added the plan’s primary purpose is “stabilizing the financial system so that banks are lending again, the secondary markets are working again.”

Geithner announced a public-private partnership plan to purchase as much as $1 trillion in devalued real-estate assets and other securities, using $75 billion to $100 billion of the Treasury’s remaining bank-rescue funds.

Market Response

Investors gave a overwhelming endorsement to the initiative as bank shares rose, led by Citigroup Inc. and Bank of America Corp., after the Treasury announcement.

The Dow, up 241 at 8017 in the past week, was up 21 percent in the past four weeks, its best move of that duration since May, 1933. It was also the Dow’s first close above 8,000 in two months. The S&P 500 rose 26 points, or 3.3 percent for the week, to 842. The Nasdaq rose 76 points, or 5 percent to 1621.

Investors last week poured money into the financials, which were best performers with a 6.4 percent gains, but they also bought consumer discretionary stocks, which gained 6.3 percent. Defensive issues were the worst performers, with health care down 1.6 percent and consumer staples down a slight 0.1 percent.

Real Estate markets follow the reponse?

The enthusiasm in the stock market seems to have begun spilling over to real estate. Real estate stocks have also seen significant gains over the pass weeks, as investors are betting on a real estate turn around.

“Prices are so low, we’re starting to see that,” says Marc Savitt, a realtor there for a quarter of a century. “In our area, you’re at the bottom.”

Savitt, is the president of the National Association Of Mortgage Brokers, and may seem a little overly optimistic. But he is hardly alone in sensing a long-awaited bottom in the real estate market.

The National Association of Realtors reports that sales of existing homes grew 5.1 percent to an annual rate of 4.72 million during February 2009, from 4.49 million units in January.

It was the largest monthly sales jump since July 2003, first-time buyers accounted for about half of all transactions. The median price of existing homes in the West was $204,600 in February, 5.1 percent below January and 30.3 percent below the February 2008 figure.

Lawrence Yun, the National Association of Realtor’s chief economist, said first-time buyers accounted for half of all U.S. home sales in February, especially in the lower price ranges.

“Because entry-level buyers are shopping for bargains, distressed sales accounted for 40 to 45 percent of transactions in February,” he said in a statement. “Our analysis shows that distressed homes typically are selling for 20 percent less than the normal market price, and this naturally is drawing down the overall median price.”

“If January was a disaster for housing, February may be the rebound month,” wrote Joel Naroff, president of Naroff Economic Advisors. The sales figures don’t yet reflect the new $8,000 tax credit designed to lure even more first-time buyers into the market, should help early summer sales, but how much will depend on the overall condition of the U.S. economy.

U.S. Federal Reserve Chairman Ben S. Bernanke is delivering record low mortgage rates and a refinancing boom that’s putting cash in home owners pockets and helping to stabilize house prices.

Fixed 30-year mortgage rates fell to a record low for the second consecutive week last week, hitting 4.78 percent, Freddie Mac said yesterday in a statement. The rates are the lowest in records dating back to 1971. This has helped mortgage applications in the U.S. rise for the fourth straight week as a decline in borrowing costs spurred homeowners to refinance, and new home sales rose in February. The Fed’s effort to bring down fixed rates may give consumers as much as $25 billion, said Mark Zandi, chief economist of Moody’s Economy.com.

Cheaper Home Prices

Cheaper financing may also help to turnaround the housing market. Sales of previously owned homes rose 5.1 percent to 4.72 million at an annualized pace in February from the prior month as low mortgage rates spurred demand. The National Association of Realtors affordability index rose to a record in January, due to lower home values and mortgage rates. NAR said in a March 23 report, the median U.S. home price fell to $165,400, down 28 percent from its 2006 high.

Bernanke cited lower mortgage rates in testimony in February as evidence that Fed policies were working. He said the decline in financing costs caused by the central bank’s purchases of mortgage-backed securities this would help ease the financial strain on homeowners.

Improving U.S. Housing Market

“Over time, lower mortgage rates should help to improve conditions in the housing market, whose persistent weakness has had a major impact on economic and financial conditions more broadly,” Bernake said.

Forecast by the mortgage bankers’ group raised its 2009 home-loan originations by $800 billion to $2.78 trillion last month. Refinancing will increase to $1.96 trillion in 2009 and purchase originations will total $821 billion. This is evidenced by a surge of refinancing and low interest rates sent homeowners to apply for new loans.

“We have seen evidence that home sales are bottoming,” said Jim O’Sullivan, senior economist with UBS Securities LLC, in Stamford, Connecticut. “This should be positive.”

ORLANDO, Fla., March 23, 2009 /PRNewswire via COMTEX/ —-Florida’s existing home sales rose in February, making it the sixth consecutive month that sales activity showed increases in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors. February’s statewide sales also increased over January’s figures in both the existing home and existing condo markets.

Existing home sales rose 20 percent last month with a total of 9,858 homes sold statewide compared to 8,181 homes sold in February 2008, according to FAR. February’s statewide existing home sales were 16.7 percent higher than January’s statewide sales.

Florida Realtors also reported a 15 percent gain in statewide sales of existing condominiums in February, continuing a trend in recent months for higher statewide sales of both the existing home and existing condo markets compared to year-ago levels. Statewide existing condo sales last month increased 25.1 percent over the total units sold in January.

Thirteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in February while 11 MSAs also showed gains in condo sales. It marks the eighth month in a row that a number of markets have reported increased sales.

Florida’s median sales price for existing homes last month was $141,900; a year ago, it was $199,300 for a 29 percent decrease. Industry analysts with the National Association of Realtors(R: 31.39, -0.18, -0.57%) (NAR: undefined, undefined, undefined%) report a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less.

The national median sales price for existing single-family homes in January 2009 was $169,900, down 13.8 percent from a year earlier, according to NAR. In California, the statewide median resales price was $254,350 in January; in Massachusetts, it was $321,000; in Maryland, it was $244,820; and in New York, it was $205,000.

Significant variations in local markets continue, according to NAR’s latest housing outlook, which also notes that it will take time for the impact of the economic stimulus to show in housing data. “Some markets appear to have reached the tipping point of accelerating home buying,” said NAR Chief Economist Lawrence Yun. “Improvement from the economic stimulus isn’t likely to show as closed home sales before summer, although we may see an earlier lift from lower mortgage interest rates.”

NAR analysts estimate the impact of the federal economic stimulus package and lower interest rates on the housing market to be about 900,000 additional home sales in 2009 compared to conditions before the stimulus package. By the end of the year, NAR expects inventory to fall below an eight-month supply, which would be consistent with home price stabilization.

In Florida’s year-to-year comparison for condos, 3,198 units sold statewide compared to 2,785 sold in February 2008 for a 15 percent increase. The statewide existing condo median sales price last month was $109,300; in February 2008 it was $173,900 for a 37 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $174,400 in January 2009.

Interest rates for a 30-year fixed-rate mortgage averaged 5.13 percent last month, down significantly from the average rate of 5.92 percent in February 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.

Among the state’s medium-size markets, the Fort Pierce-Port St. Lucie MSA reported a total of 372 homes sold in February compared to 263 homes a year ago for a 41 percent increase. The existing home median sales price was $122,100; a year ago, it was $172,900 for a 29 percent decrease. In the year-to-year comparison for the existing condo market, a total of 71 units sold in the MSA last month, up 22 percent compared to 58 condos sold the previous February. The market’s existing condo median price was $116,700; a year ago, it was $126,700 for an 8 percent decrease.

Two charts showing statistics for Florida and its 20 MSAs are attached. One chart compares the volume of existing, single-family home sales and median sales prices in February 2009 to February 2008 based on Realtor transactions; the other compares the volume of existing, condominium sales and median sales prices in February 2009 to February 2008 based on Realtor transactions.

The Florida Association of Realtors, the voice for real estate in Florida, provides programs, services, continuing education, research and legislative representation to its 125,000 members in 67 boards/associations.

SOURCE Florida Association of Realtors

While clearly no one has a crystal ball with definitive answers there does seem to be some general focus around:

1)   The market will hit bottom when the psychology of homebuyers becomes positive, optimism improves, and people are willing to stick their necks out again.  While some areas such as New York are on a decline, clearing other harder hit areas show signs of optimism as Florida’s existing Home, Condo sales rose in February 2009 and other indications that March figures may reflect the same.

2)   The market will hit bottom when employment turns around. While unemployment is clearly still a big problem the pace as definitely slowed.

3)   The market will hit bottom when credit loosens and businesses can borrow for working capital, expansion, and long term plans. This is clearly an issue between banks protecting there capital during uncertain times mixed with capitalization issues with many of the major banks. All indications are this is yet to be resolved.

4)   The market will hit bottom when the stock market turns around and consumers see a positive trend. While many believe the current market rally in March and April may not last, most analyst agree we are in the mist of a bottoming process and many indicators show that Americans are optimistic that despite corrections that may occur in this rally, that the market will generally have a positive grown over the course of the year.

5)   Finally, the market will hit bottom when government stimulus programs begins to work. This will bring back consumer confidence, which will then reduce unemployment, re-capitalize the banks, loosen credit, and bring the stock market back.

It is obvious that all of these problems are interrelated and feed upon each other. But they are all symptoms - the outward manifestations of the problems - and not the causes or the cures. What is scary is the speed at which these symptoms appear to turn around in the pass month once people seem to have developed a sense of optimism in the market.

It seems many buyers are not waiting to find out when the real estate market will hit bottom and have begun buying.

According to a report by the National Associations of Realtors (NAR) on Feb 12, 2009, the median price of single-family home resale in 88 percent of the United States’ metropolitan areas trended down in the fourth quarter 2008 from a year earlier. 45 percent of the transactions in this quarter were distressed sales, foreclosures and short sales, which lead to the decline in the median price. The most significant price drop occurred in Florida, Michigan, California and Arizona.

Nationally, the median price for single-family homes dropped 12.4percent year-over-year in the fourth quarter. Regionally, the median home prices dropped 25.1 percent in the West, 10.6 percent in the Midwest and 7.5 percent in the South and 4.7percent in the Northeast.

NAR President Charles McMillian pointed out “distressed home sales have risen from about 38 percent of transactions in the third quarter, meaning people are responding to discounted prices and are slowly absorbing the excess inventory. Buyers clearly see value in today’s pricing.”

Lawrence Yun, NAR chief economist reported the largest gain in sales volume for the fourth quarter was in Nevada, up 133.7 percent, followed by California, rose 84.7 percent, Arizona, up 42.6 percent and Florida with a 12.5 percent increase.  This is a clear pattern that strong sales gain in lower price homes occurs in areas with extreme price declines resulting from foreclosures.

In the condo sector, the strongest condo price increases in this quarter were in the Dallas – Fort Worth – Arlington in Texas, up 14.1 percent, followed by Toledo, Ohio, up 11.4 percent compared to fourth quarter in 2007.

Yun noted despite the market being clearly depressed by job losses and consumer concerns about the economy, the much anticipated housing provisions in the economic stimulus package may spur some buying interest for the critical spring home buying season.

A survey by Pew Research Center’s Social and Demographic Trends project in October 2008 shows Denver, San Diego and Seattle as the top three cities most respondents would like to live. Orlando Florida, Tampa Florida ties for fourth place with San Francisco California. Detroit, Cleveland and Cincinnati at the bottom of the ranking.

Major findings include:

• Ideal community type:

            30% small town

            25% suburb

            23% city

            21% rural area

• Young adults would rather live in New York and Los Angeles        
• More men than women want to live in Las Vegas, Nevada
• Republicans prefer Phoenix, Arizona
• Democrats would rather live in San Francisco, California
• Seven of the top ten favorite cities are in the West and the other three are in the South     
• More than 60% of Americans prefer to live in a hot-weather over a cold-weather climate
• Almost half of those surveyed would rather live in a different community than there current home.
• 60 % rate their current communities as excellent or very good.       

John A. Courson, President and CEO of the Mortgage Bankers Association (MBA) issued a statement on February 10, 2009 in response to Treasury Secretary Timothy Geithner’s announcement on the administration’s plan to help recapitalize the banking system and aid struggling US Real Estate.

Mr. Courson highlighted two major components of Geithner’s plan. First, efforts will be made to help homeowners who are having difficulty making their mortgage payments.  Stemming the tide of foreclosures is a crucial part of stabilizing both the housing market and the overall economy. Mortgage Banker Association supports Treasury’s goal of bring all stakeholders together around a uniform and workable standard for modifying loans to help troubled homeowners of US real estate achieve an affordable monthly mortgage payment.

The second component consists of a multi-pronged approach to restart the stalled credit markets and encourage financial institutions to start lending again. Mr. Courson is pleased the expansion of the TALF to specifically include commercial mortgage-backed securities. The US Mortgage Banker Association hopes the program will contain support for both new and existing assets including private label residential mortgage-backed securities.

The US Mortgage Banker Association will continue to work with the administration, banking regulators and Congress to ensure the plan is quickly implemented and has its maximum intended effect.