Chief economist for NAR says we will know soon if the housing stimulus worked or not.

“If the pause in housing activity only last another month . . . then I think we’re on our way to a decent recovery,” Lawrence Yun, chief economist of the National Association of Realtors told St. Louis Realtors on Monday. “But if the pause lasts beyond August, then we’re looking at trouble.”

Yun also sited jobs creation as a major indicator for an economic turnaround.   “If we see 1/2 million jobs created in the second half of this year – that is a good sign that the economy is turning around,” Yun said.  “Unfortunately, it may take over four years for us to recover from all the job losses we have sustained so far.”

“A possible ‘Double-Dip’ in the housing market is a concern, but it would be mild considering the huge drop in home values we have already seen,” Yun said. “The bigger fear is whether consumer psychology is damaged enough to create an ‘over-correction’ in prices.”

Yun also warned that Realtors must get used to dealing with short sales and foreclosures because they are not going away.  “Distressed home sales will continue to be over 1/3rd of the St. Louis housing market,” he said.

In regards to the housing stimulus, Yun says the National Association of Realtors estimates that nearly an additional one  million buyers entered the housing market to take advantage of the tax credit for homebuyers.  “These are buyers we estimate would not have bought homes if the incentive wasn’t available,” he clarified.

Yun also spoke about the possibility of a ‘housing shortage’ within the next 2-3 years.  “Household formation is poised to rebound,” he says. The recession has forced college graduates to move back in with their parents and for some to “double-up” with roommates.  “If housing starts continue to drop as the economy improves, there will be a lot of people looking to buy houses.”

Visit your St. Louis Real Estate Information site for more details.

We.ve seen a solid increase in St. Louis real estate sales this year.   Lawrence Yun, chief economist of the National Association of Realtors is predicting a 20% increase in home sales for the first half of 2010.  We can count on 2.6 million home purhcasers taking advantage of the credit.  Yun admits that his prediction is assuming that we will continue to see historically low interest rates of around 5.0 to 5.5% — for today’s rates contact my mortgage partner Matt Eversgerd of Stifel Bank at 314-620-7227.

Currently, the Fed plans to end its purchase of Mortgage Backed Securities.  We will see rates rise on this action.  But we shouldn’t see rates go through the roof — they will likely land in the high 5s.  The rate change from today’s 4.875 for 30 year fixed rate money to the likely 5.875% we will see in 2010, means that every $100,000 that you borrow will cost you an additional $60 per month.

For example, a $250,000 loan today has a principal and interest payment of $1324. If rates increase a full percentage point, as expected by mid-2010, that same loan amount will cost you $1480.

I’m optimistic about 2010.  Throughout this past year the St. Louis real estate market has had it’s ups and downs, but my sense is that our outlook is better than it was a year ago.

One of the reasons for my optimism…. During 2008 and 2009, while the overall St. Louis transaction volume sank by 30%, mine went up.  I’ve sold 80 homes during the 08/09 decline.  So, Nolting Real Estate is doing something right for St. Louis real estate buyers and sellers.  Check us out.

According to reports June was the 5th month in a row where pending real estate sales were on the rise, great news for the national real estate market.  While there are still many areas where sales are faltering the majority of the country is seeing home values stabilizing or dropping at greatly decreased levels while at the same time the volume of sales is picking up.  A recent Associated Press article pointed out that “the last time there were five consecutive monthly gains was July 2003.”  Lower home values, the first time home buyer tax credit and reduced mortgage rates are seen as drawing people back into the real estate market.  People can find bargains as far as real estate goes and that is an attraction in any market. At this link you can create an online search for your St. Louis home. For more information visit YahooRealEstate.com.