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Reporting on a two-month lag, the government said home values rose 0.7 percent in November.

National home prices are at their highest point since February 2009.  

But before we look too much into the FHFA’s Home Price Index, it’s important that we’re cognizant of its shortcomings; the most important of which is its lack of real-time reporting.

According to the National Association of Realtors™, 80% of purchases close within 60 days. As a result, because of its two-month delay, the Home Price Index report actually trails today’s market data by an entire sales cycle.

This is one reason why home values appear to be rising even while new data shows that both Existing Home Sales and New Home Sales fell flat last month.  The home valuation report is using data from November; the sales reports are using data from December.

The Home Price Index is a trailing indicator and next month, as the Spring Market gets underway, the government will be reporting data from the holidays.

The same is true for the Case-Shiller Index. It, too, operates on a 2-month lag.

All of that said, however, long-term trends do matter in housing and the Home Price Index has shown consistent improvement over the last 10 months.  In many markets, home sales are up, home supplies are down, and values have increased.  This trend should continue into the early part of 2010, at least.

If you’re wondering whether now is a good time to buy a home , consider low prices, cheap mortgages and an available tax credit as three good incentives.  By May, none of them will likely be available.

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Interest Rates WILL RISE, the question is WHEN. Currently FHA is tightening even further their borrower qualifications.  Soon borrowers will need at least a mid 600’s score to still qualify for the 3.5% down program; if not they will be forced to put 10% down.  Furthermore 2 things are changing with FHA: # 1 seller gifted funds max amount will be lowered from 6% to 3% AND upfront mortgage insurance is going from 1.75% to 2.25% of the loan amount.  All this is being put into action so that FHA can build their reserves account as they had vastly increased their market share.  Simultaneously bonds are expected to raise and perhaps the largest factor in mortgage interest rates is the fact that the government has been subsidizing the purchase of mortgage backed securities; this will go away in April.

As these three things converge you can be SURE of one thing: Interest Rates WILL GO UP.  The cost to buy a home on a monthly basis WILL GO UP.  The things still in question are:

# 1 WHEN, if all this happens SOON how long will it take to directly effect MTG. RATES?  My guess, as soon as June, as late as beginning 2011.
# 2 WILL this effect CAUSE housing prices to fall even more?  My guess, under $300K in Salt Lake City, NO.

The math is simple.  If rates rise 1.5% (as many experts predict) then the average priced home in SLC (Currently $221K) will cost you $210.00 MORE a month.  OR put another way, rates go up 1.5% you will spend $100 more a month PER $100K you finance.

This can make a marginal difference; think about it!  Many are fence sitting thinking the house they want may still come down $50K.  Well if you wait and really do save $50K it may still cost you hundreds more a month in RATE.

IT really comes down to finding that sweet spot between price and rates and the bottom.  I am an expert and watch it everyday…..so want my honest opinion?  Rates are as LOW as you will get NOW, and prices under $300K are as low as you can get.  Best time to buy for price and rate: NOW.  Once again.  Right now you can own the average priced home in SLC at $211K with 3.5% down for $1095 a month.  And that price will get you a nice home around 2500 square feet with a 2 car garage in a good neighborhood in the south west end of the valley!  HEY, believe me…..I know the market is BAD, I live eat and breath it……but is there anyone out there that REALLY BELIEVES it will get better than that???

The Federal Open Market Committee voted to leave the Fed Funds Rate within its target range of 0.000-0.250 percent.                                                                  

In its press release, the FOMC noted that the U.S. economy “has continued to strengthen”, that the jobs markets is getting better, and that financial markets are supportive of growth.

There was no mention of the housing market’s strength.  The last 3 statements from the Fed included that specific verbiage.

It’s the fifth straight statement in which the Fed spoke about the economy with optimism.  This should signal to markets that 2008-2009 recession is over and that economic growth is returning to U.S. economy.

The economy isn’t without threats, however, and the Fed identified several in its press release, including:

1. Credit remains tight for consumers
2. Businesses are reluctant to hire new workers
3. Housing wealth is down

The message’s overall tone, however, remained positive and inflation appears is still within tolerance.

Also in its statement, the Fed confirmed its plan to hold the Fed Funds Rate near zero percent “for an extended period” and to wind down its $1.25 trillion commitment to the mortgage market by March 31, 2010.  This is noteworthy because Fed insiders estimate that the bond-buying program suppressed mortgage rates by 1 percent through 2009.

Mortgage market reaction to the Fed press release is, in general, negative. Mortgage rates are rising this afternoon.

The FOMC’s next scheduled meeting is March 16, 2010.

Sales of single-family homes in Salt Lake County were up 36.2 percent in the fourth quarter compared to the same quarter last year. There were 2,403 homes sold, up from 1,764 homes sold a year ago. Last year at this time fourth quarter sales were down 21 percent.

Nearly every area of the Salt Lake Valley reported double-digit increases in single-family home sales. In Draper (84020) home sales soared by 51.7 percent. In Midvale (84047), sales were up 108.8 percent. In Herriman (84096), sales rose by 42.3 percent. In West Valley (84128), sales were up 38.5 percent. Areas of downtown Salt Lake City also saw big increases in sales. Sales in the Avenues (84103) were up 41.7 percent.

Driving the home sales was the $8,000 federal home buyer’s tax credit and more affordable home prices. In the fourth quarter the median single-family home price fell 7.6 percent to $221,650, down from $239,950 a year ago.