In this Issue: Housing Market Hits the Bottom Home Buyer Tax Credit Becomes Down Payment Consumer Confidence: Biggest Jump in 6 Years   (Please leave us a comment at the bottom of the newsletter.)

Housing Market Hits the Bottom

Many real estate professionals and most of the major indices believe the beleaguered housing market has finally hit the bottom or is only weeks away from being at the bottom of the market.

The general mood in the real estate industry seems to be on an uptrend. A recent survey conducted by HomeGain.com showed that almost half of real estate agents who took part in the survey expect home prices to stop falling and begin increasing in the next six months. The majority of these agents (85 percent) said that the homes in their areas had dropped in value in the last twelve months. However, the last couple of months they have definitely seen an increase in activity and sales.

The indices have been trending more positive as well. The National Association of Home Builders/Wells Fargo Bank said that housing affordability reached as high as 97 percent in some areas. In addition, 73 percent of all homes sold in the first quarter this year were considered affordable. An affordable home is one in which a family making a median income of $64,000 will pay a maximum of 28 percent toward their housing costs.

Housing inventories are beginning to decline as well. With fewer foreclosures coming on the market, fewer new homes being built and more buyers able to afford a home, the existing home inventory that has built up over the past few years is quickly being depleted. The foreclosures that are coming on the market are being priced lower. This coupled with the low interest rates available is spurring buying.

While the new home market optimism is good, there are still some outstanding issues that may have a negative impact on the future of the housing market. The Obama administration’s Foreclosure Prevention plan has been hindered by problems and glitches. Instead of helping millions of people so far, only around 55,000 distressed homeowners have taken advantage of the program.

Home Buyer Tax Credit Becomes Down Payment

In an effort to spur the housing market, the United States Department of Housing and  Urban Development (HUD) released plans to implement flexibility to the $8,000 First Time Home Buyer Tax Credit; as part of President Obama’s 2009 stimulus package.

According to HUD Secretary, Shaun Donovan, “We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment.”

FHA will allow approved lenders and nonprofits to issue short-term bridge loans buyers can use for down payments. Buyers would repay the loans after getting their tax refunds in 2010.

Allowing first time homebuyers to utilize the tax credit as a down payment, plus the availability of low interest rates, creates incredible opportunities for those who waited.

Consumer Confidence: Biggest Jump in 6 Years

U.S. consumer confidence soared in May to its highest level in eight months as severe strains in the labor market showed some signs of easing. “Consumers are considerably less pessimistic than they were earlier this year,” said Lynn Franco, director of The Conference Board’s Consumer Research Center.

The Board said its index of consumer attitudes jumped to 54.9 in May from a revised 40.8 in April, the biggest one-month jump since April 2003. Economists had been looking for a much smaller rise to 42.0.

The data was in line with other evidence suggesting that, while the economy continues to contract in the current quarter, the pace of deterioration has abated somewhat.

The survey offered mixed messages regarding Americans’ propensity to spend money. The proportion of those who said they planned on buying a car over the next six months rose to 5.5%, its highest in at least a year. But fewer intended to buy homes — only 2.3%, a tough break for one of the hardest hit sectors in the country’s economic crisis.