Tipsheet: Housing market

As the economy meanders its way toward recovery, the housing market remains weak. Now that tax credits for new home-buyers are expiring, what's the housing outlook in your community?

A new report predicts it could take years for the housing market to bounce back from the worst correction in more than half a century. Harvard University's Joint Center for Housing Studies says that while the situation has improved since the depths of the recession, foreclosures are still a drag on the housing market, keeping inventory up and prices low. And the report says that as long as unemployment remains stubbornly high, the housing market will stay flat.

There are signs of life in the housing market in some parts of the country, however. Bloomberg Businessweek has ranked metro areas showing the biggest improvement and says these cities "appear to have entered the early phases of the long recovery process." Check to see where your community ranks. But temper those ratings with a reality check. In some parts of the country, economics professor Karl Case told NPR, housing markets haven't really recovered that much, they've just made up a little of what they've lost.

Another housing story to keep an eye on is the wrap-up of the federal tax credit program for first-time home buyers. Eligible buyers who signed contracts before the credits expired at the end of April must close on their contracts by the end of June to get the benefit they qualified for. The Senate has approved an extension of the closing deadline until the end of November but many would-be buyers are trying to wrap things up now, just in case. And as MarketWatch points out, delays in mortgage settlements are not uncommon. Check with title companies, real estate agents and lenders in your area to see if they're already crunched to get things done over the next two weeks. Consider doing a consumer report explaining what buyers need to know to make sure a settlement goes smoothly.

Keep an eye on home prices in your area, as well. One national real estate firm, Zip Realty, reports that almost half of home sellers cut their prices in May, the month after the tax credits ran out. What are would-be sellers going to do now to try to move their properties?

SABEW's Melissa Preddy suggests looking for more "sale by owner" activity and for incentives like free appliances or upgrades. But many would-be sellers just can't afford to get out of their homes. The Harvard report says one in seven own a house that is worth less than they owe on the mortgage and 5 million Americans won't be "above water" on their mortgages until the value of their homes go up by at least 25%.

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