PARAMOUNT MORTGAGE - LENDER'S BLOG

In a government report last week homeowner vacancies, i.e., the proportion of the homeowner inventory that is vacant, has fallen over the last four consecutive quarters.

“The home ownership rate actually rose….What? That's correct,” exclaims finance reporter Paul Muolo, editor of National Mortgage News. “This would be a terrific development for the mortgage and housing industries.”

“If the government's number holds, and is not revised downward later on, this could very well mean that for many Americans the cost of owning is now cheaper than renting,” offers Muolo.

The report from the U.S. Census Bureau contains data from their Current Population/Housing Vacancy Survey which shows a trend of home vacancy numbers declining each quarter; Q4 2010: 2.7%, Q1 2011: 2.6%, Q2 2011: 2.5% and Q3 2011: 2.4%.

The report shows that rental vacancies are rising. The latest rental vacancy figure is pegged at 9.8 percent, up from 9.2 percent in the second quarter. Muolo claims “that more renters believe they are wasting their money by giving it to a landlord,” and as home ownership shows steady increases this may be the start of “a long-term trend.”

Muolo says that for any meaningful housing revival to occur the nation needs one other thing: true improvement in the unemployment rate.

According to the National Association of Realtors®  (NAR) home sales rose in every state during the third quarter compared to the same period one year earlier but prices continued to decline.

Median prices nationally declined 4.7 percent from $177,800 in the third quarter of 2010 to $169,500 in the most recent period. Distressed homes accounted for 30 percent of home sales compared to 33 percent in the second quarter and typically sold at a discount of about 20 percent.

Cash purchases of homes, primarily from investors, have remained steady at 29% percent of home purchases during the quarter. This number is unchanged from a year earlier.

First-time buyers purchased 32 percent of homes in the third quarter. Historically, entry-level buyers are responsible for about 40 percent of home purchases.

NAR President Ron Phipps said home sales should be notably higher given the buying power in today's market. "Housing affordability conditions have been at a record high this year, rents are rising and homes are selling for less than the cost of construction in most of the country.

"For people with secure jobs, good credit and long-term plans, they will remember today's conditions as a golden opportunity to enter the housing market."