The journey out of the Housing Crisis has already begun, according to a Wall Street Journal report.
DM Properties would like to share with you an editorial published in The Wall Street Journal on May 6 entitled “The Housing Crisis is Over” by Cyril Moulle-Berteaux, managing partner of a New York-based hedge fund.
His major points are outlined below:
- It is very likely that April 2008 will mark the bottom of the U.S. housing market.
- The market will turn because normal people can afford homes again.
- In 2005 and 2006, the height of the boom, 25% of a family’s average
- monthly income was required to service a home mortgage; for first time buyers, that figure was closer to 37%. “Prices got so high that people who intended to actually live in the houses they purchased (as opposed to speculators) stopped buying” writes Moulle-Berteaux. “This caused the bubble to burst”.
- Since then, house prices have fallen 10%-15% while incomes have kept growing (albeit more slowly of late) and mortgage rates have come down 70 basis points from their highs.
- Today it takes 19% of monthly income for the average homebuyer, and 31% of monthly income for a first time buyer to purchase a house. Homes on average are back to being as affordable as during the best of times in the 1990’s. “We are of course experiencing a serious housing bust with serious economic consequences that are still unfolding”, Moulle-Berteaux concludes.
“Nonetheless, housing led us into this credit crisis and this recession. It is likely to lead us out. And that process is underway right now.”
Read the full story on the Wall Street Journal Web site:
(source: Christie’s Great Estates’ Marketing Exchange).