Good Housing News Predicted

All the leading indicators say housing is definitely on the mend, economists reported in advance of the official release of several pieces of good news expected this week.

Bloomberg News surveyed 53 economists and asked them where they expected the numbers to fall. Here are their predictions:

  • Construction starts in September are expected to hit a 610,000 annual rate, the most since last November.
  • Sales of existing homes likely rose to a two-year high.
  • Because of fear of a relapse, the Federal Reserve is predicted to leave interest rates low for a few more months.
  • Building permits, a sign of future growth, probably rose to a 590,000 annual pace, also the highest level since November, the Commerce Department is likely to announce.
  • The National Association of Home Builders/Wells Fargo index is expected to rise to 20 from 19, the economists say.

Google Inc. plans to resume hiring and acquisitions after its third-quarter sales beat analysts’ estimates. CFO Patrick Pichette says: “We weathered what is an incredible recession. If you have all this behind you, the only outcome you should have as management is: ‘OK, let’s build now.’”

Source: Bloomberg, Courtney Schlisserman (10/18/2009)

7 Tips for First-Time Home Buyers

Here are seven bits of wisdom from economists and financial planners for anyone contemplating a home purchase today:

  • Old-fashioned basics are more important than ever. The safest way to purchase a home is to put down 20 percent on a fixed-rate, 30-year (or less) mortgage.
  • Don’t become overconfident about income growth. Even though buyers in their 20s and 30s will likely see their incomes grow more quickly than previous generations, it is important to act sensibly when borrowing.
  • Anyone contemplating adding children to the family should calculate whether they could live on one income because having both halves of a couple work may turn out to be impractical.
  • Include a maintenance budget. Even new homes need upkeep and repairs.
  • Buyers who can’t afford their dream home now should opt for a starter home where they can save money each month for what they really want.
  • Consider a property that can be expanded and improved down the road when money is available.
  • No two buyers are the same, but they should all feel confident with the loan they enter into, no matter the size of the mortgage.

Source: The New York Times, Ron Lieber (09/2009)