Economists expect prices to continue to fall through at least mid 2012.  This is due to the continued oversupply of houses available due to the huge number of distress and foreclosed properties.  See the full article here.

The article is based on 20 cities but is a good representation of the entire country.

via House Prices Through 2015.

1.  We are experiencing the lowest housing prices in years

2.  Interest rates are at a 50 year low

3.  Interest rates are expected to go back up

4.  Adjustable rate mortgages are at record lows

5.  Low down payment mortgages are still available for the time being

6.  Lenders have begun to loosen up a little

7.  Some lenders are offering no fee mortgages

8.  Home builders are eager to sell and many are offering nice incentives

9.  Resell homeowners are motivated to sell

Interest rates are increasing

Rates have gone up almost 3/4 of a point in the last 6 months and are expected to continue to rise.

The 30 year mortgage may disappear

Several experts believe if Fannie Mae and Freddie Mac’s roles are eliminated, or even limited, it may bet the end of the 30 year mortgage.

Qualified mortgage requirements could be more stringent

Proposed changes include:

1.  Elimination of certain mortgage types

2.  Minimum of 20% down payment

3.  Minimum 690 FICO score

4.  Lowering of ratio of income to both the mortgage payment and the overall debt to 28% and 36%

Rents are expected to increase

Supply and demand.  The demand is increasing while the supply is decreasing.

There is a lot of inventory on the market right now.  Jump in before it’s too late or the cost is just too high.

Distressed homes – sold at discount – accounted for a 39 percent market share in February, up from 37 percent in January and 35 percent in February 2010.

The map below shows the percentage of distressed home sales for the month of February.  Distressed home sales in Tennessee accounted for 32% of the total sales.

Distressed sales map

The article also indicates Tennessee is number 17 in the nation with the highest level of shadow inventory.  Based on the number of distressed sales it would take 14 months to clear the shadow inventory in the state.  It will actually take longer to clears ours than it will to clear the shadow inventory in California.

Months to clear shadow inventory by state

The maximum loan FHA can insure is scheduled to decrease in October.  On April 18 the mortgage insurance premium on FHA loans will increase a quarter of a percent.  The minimum down payment which has already increased from 3% to 3.5% is expected by many to go up to 5%.  These changes may put home ownership out of reach for many first time home buyers which represent 75-80% of all FHA loans.

If you are thinking of buying you should get things going before these changes go into affect.

Good News for Chattanooga Housing

The complete list is:

San Jose, CA
Santa Ana, CA
Bethesda, MD
Pittsburgh, PA
San Diego, CA
Oklahoma City, OK
Washington, DC
Austin, TX
Chattanooga, TN
Boston, MA

Karen Rhodes Realtor

$150 million

The Manor

Holmby Hills, Calif.

The home that Candy Spelling, widow of television giant Aaron, put on the market in 2008, out-prices every other property in the U.S. The 56,500 square-foot English-style mansion has a bowling alley, wine cellar, rooms for gift-wrapping and silver and china display, a library, gym and media room. Its 4.6 acres includes pools, a spa, landscaped gardens, a waterfall and parking for over 100 cars.

$125 million

Fleur de Lys

Beverly Hills, Calif.

This 35,000-square-foot home, listed in 2007, is said to be modeled after Versailles, and the mansion makes no attempt at understatement. Its 12 bedrooms, 15 bathrooms, 50-seat screening room, Italian marble and gold-embossed leather walls ooze wealth. Owner Suzanne Saperstein hasn’t compromised on the price in three years. After all, it’s a relative bargain compared to the manor, just a few blocks away.

$100 million

Tranquility Estate

Lake Tahoe, Nev.

Tommy Hilfiger cofounder Joel Horowitz’s 210-acre spread features the third-highest price tag in America. The 20,000-square-foot main house has extras like a cigar lounge, art studio and sports gym, while its grounds feature a golf course, boathouse and views of Lake Tahoe. A staircase in the home replicates the stairs of the S.S. Titanic. The home has been on the market for almost four years.

$80 million

Kaiser Estate

Honolulu, Hawaii

Separately, the three coastal parcels that comprise the former estate of industrialist Henry J. Kaiser wouldn’t make this year’s list, but together, the 5.5-acre property becomes one of the country’s most expensive. The island getaway offers coastal views and a sleek mid-century style 15,000-square-foot home, extensively landscaped tropical grounds and a 12,000-square-foot boathouse and marina. Tech tycoon Fred Chan and his wife, Annie, put the home on the market in January 2009.

$75 million

Humming Bird Nest Ranch

Simi Valley, Calif.

Though it’s named after the tiniest of birds, this property spans 123 acres. In addition to a 17,000-square-foot Spanish-Revival-style main house, six guest homes and 10 townhouses grace the estate, as does a fully equipped equestrian center and parking for 200 vehicles. If driving doesn’t suit you, there’s also a helicopter pad.

$75 million

Former Julius Forstmann House

New York, N.Y.

Historic, spacious and well-located Upper East Side townhouses don’t come on the market very often. When they do, they typically command attention with a jaw-dropping price tag, and this 21,000-square-foot limestone mansion on 71st Street, off Fifth Avenue is no exception. It has been on the market since 2008. Built in 1922 for Forstmann, a wealthy German merchant, the landmarked building offers five stories packed with original details like a sweeping marble staircase, marble fireplace and hand-carved moldings.

$75 million

Porcupine Creek

Rancho Mirage, Calif.

Golf enthusiasts with deep pockets might swing by Porcupine Creek, a residence that features a 19-hole course that won acclaim from Golf Digest magazine and was put on the market early this year. Its 249 acres outside of Palm Springs are also home to a 25,000-square-foot main house, a spa, gym, pool and grotto. Edra Blixseth, who got the property in a divorce settlement with her husband, Tim Blixeth, is selling the home out of bankruptcy.

Additionally, there are new benefits for members of the military and certain other federal employees:
Members of the military and certain other federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and qualify for the credit. Thus, an eligible taxpayer must buy, or enter into a binding contract to buy, a principal residence on or before April 30, 2011. If a binding contract is entered into by that date, the taxpayer has until June 30, 2011, to close on the purchase.

Members of the uniformed services, members of the Foreign Service and employees of the intelligence community are eligible for this special rule. It applies to any individual (and, if married, the individual’s spouse) who serves on qualified official extended duty service outside of the United States for at least 90 days during the period beginning after Dec. 31, 2008, and ending before May 1, 2010