Bottomed-Out?

There's some good financial news out there, finally! According to the National Association of Realtors, home sales are picking up as people are cashing in on low home prices and low mortgage rates. Industry experts seem to think that we're pretty much at the bottom now, with 2009 seeing a modest increase in home sales, followed by more substantial increases in 2010. The median home price may continue to decline this year, but experts expect prices to begin increasing in 2010. In other words, this is the year to make a move if you've been considering it!

"An NAR index that tracks housing affordability rose to a record level in January. This was because the combination of mortgage rates, family income and home prices in January were "the most favorable since tracking began in 1970," according to the group ... The NAR also forecasted that existing home sales would rise 0.3% this year, then 5.8% in 2010. The median price would fall 4.9% this year, but rise 3.9% in 2010. New home sales would be down over 39%, with the slowdown in building and the need to trim inventory. But the median price for new homes would drop only 3% this year, then rise 4.2% in 2010. All these facts, figures and forecasts point to one thing. If people find good value and a good mortgage rate on a home they love, this is the year to buy.

It wasn't that hard to spot positive signs, although neither Wall Streeters nor the media seemed to pay much attention. Consumer spending rose in January, as did personal income. In fact, after-tax, inflation-adjusted income has now gone up three straight months. No one thinks consumer spending will explode, but the worst may be over in that department. Meanwhile, the personal savings rate increased to 5% in January, its highest level since 1995.

This time around, the bad week in stocks gave us a good week in bonds, so the benchmark 10-year Treasury's price went up. Its yield, which runs counter to price, went back down below the 3% threshold, settling at 2.823%. The mortgage rate situation continues to be very very appealing."