‘Bargains to be had,’ says local housing expert
The affordability index for housing has improved for the first time in six years in Mesa County, said Bob Reece, president of Advanced Title Technology.
The index factors personal income, housing costs and interest rates, Reece explained in the Mesa County Real Estate Report newsletter.
“When the cost of housing decreases and interest rates decline, there will be an improvement in the index, assuming personal income stays the same or improves,” he wrote.
“An index of 100 suggests a person with median income would be able to afford a house of median value given conventional financing and down payment requirements.”
Mesa County’s affordability index for housing was 97.6 in 2008, up from 93.4 in 2007. The index was 143.8 in 2002.
When housing is affordable, people will buy, Reece said, predicting that local builders will be able to sell most of their inventory this year.
That’s one good indication for the local economy, he said.
“The second one is that interest rates look like they will stay very low,” he said. “The third is that it looks like sellers are willing to start making deals. I don’t think we’ll see any noticeable changes until sometime mid-year. I hope that credit markets will finally figure out what the rules of the game are, and I suspect our legislators will finally decide on some programs that will actually work both with banks and borrowers.”
Consumer confidence will be the key to a turnaround.
“Once the trust is there, people will start spending again,” he said. “Things have not gotten noticeably worse.”
What is holding people back is confidence in any number of things from job security to relocation possibilities, he said.
“A lot of it has to do with trust in whatever programs are going to be there for the country, and time will tell.”
Mesa County real estate sales were down 37 percent in the fourth quarter of 2008 compared to the fourth quarter of 2007, Reece wrote.
For the year, sales were down 30 percent in 2008 from 2007.
“There are bargains to be had,” Reece said.
“The fact that prices are more affordable today and interest rates are low — all of that is only good if you can take advantage of it.”