Just read an article where Warren Buffett and a group of top corporate leaders are weighing in on a key issue that's crucial to a sustained real estate recovery: How long will the good economic news we've been getting lately continue? Is there going to be a let down later in the second half of the year or is the current slow economic growth pattern a long term trend?
Mr. Buffet told annual stockholders of Berkshire Hathaway who gathered in Omaha that the economy is showing significant and persistent improvement for the first time since the first quarter of 2008. Other top business leaders quoted last week by the Wall Street Journal said they are now confident that the U.S. will see sustained growth through 2010.
These statements, if true, are important for housing and offers an answer to the economic doomsayers who predict a sharp drop in home sales and real estate activity following the expiration of the government tax credits.
The latest housing and mortgage numbers certainly look encouraging: Pending home sales jumped by more than 5% in March, according to the National Association of Realtors and was 21 percent higher than the previous year for the same month. Of course to be fair there was a substantial government tax credit during that period for home buyers which moving forward isn't going to exist.
Home prices are turning modestly positive again in the majority of large housing markets. The closely-watched PMI risk index, which looks at price decline potentials for two years out, found that 42 of the 50 largest markets in its latest survey showed diminished risk.
Data firm Clear Capital found home prices gained five percent nationally year over year. Prices in a handful of smaller markets are doing better than that. Washington DC, for example, saw an 8.4 percent increase over last year, according to the latest report.
New applications for loans to purchase houses also took another big jump -- up 13 percent over the previous week, according to the Mortgage Bankers Association. Again to be fair to the numbers this was the last week to have a contract excepted by and still qualify for the government tax credits to purchase a home.
Finally, there was some outstanding news for home buyers and sellers in high cost markets: The jumbo loan market is improving with more banks now offering big loans and cutting rates. A major lender even announced that for credit-worthy applicants, it's dropping rates on jumbos to 5.7 percent for 30 years, the best ever.