Housing market conditions: Could be better, could be worse

The housing market is showing signs of stabilization according to the latest U.S. Housing Market Conditions report published by HUD. In the new normal, stabilization means that there are a few bright spots in an otherwise bleak market. First the good news:

• Nationally, housing affordability continues to increase. I guess this will only seem like good news if you are buying a home.
• Home sales in the Twin Cities reported a 17% increase in sales over 2008. Much of this is attributed to increased affordability and tax incentives.
• The rental market in the Twin Cities was balanced at the end of 2009. The vacancy rate, 5.4%, is considered optimum for a smoothly functioning market. 

You probably already know the bad news. Employment levels continue to decline, a rising number of homes are in foreclosure or at risk of foreclosure, and the construction of new homes, formerly a large source of employment, is down.

If you are looking for some upbeat reading on this last day of the work week, this report is not for you. However, if you love housing-related data take a look anyway. The report is filled with historical data, some dating back to the 60's, on housing affordability, median rents, mortgage delinquencies and mortgage interest rates. The historical data was a reminder to me that things will get better. Take a look at mortgage interest rates in the early 1980's and you will see that this is true.