It’s that time of the year again, when predictions for the upcoming year begin flooding in.
The first is from Freddie Mac chief economist Frank Nothaft, who is decidedly optimistic.
He believes home prices will hit bottom in the first half of 2011, before increasing ever so slightly in the second half of the year.
Of course, areas with large inventories of homes for sale and bank-owned REO (foreclosures) will continue to experience weakness throughout the year.
Home prices will be aided by historically strong homebuyer affordability, spurred by the ultra-low mortgage rates, which he thinks will remain attractive in 2011.
Mortgage Rates to Stay Low in 2011
“With Fed observers expecting the central bank to keep the federal funds rate at its current target range of 0 percent to 0.25 percent for most (or all) of 2011, relatively low mortgage rates will be a feature of the 2011 mortgage market,” said Nothaft, in a statement.
“While some rise in fixed-rates is expected, 30-year fixed-rate loans are likely to remain below 5 percent throughout the year, and initial rates on 5/1 hybrid ARMs will likely remain below 4 percent in 2011.”
Lastly, he thinks there will be fewer late mortgage payments, thanks to employment gains and family income growth.
Happy New Year…