Housing Market Outlook Looks Brighter than Expected

July 16, 2012

It appears that the housing market is on its way to recovering. JP Morgan recently posted a profit of $5 billion last quarter that was a result of their perception that the housing market is recovering, according to The New York Times.

JP Morgan has been putting money aside for losses due to bad mortgage loans for those mortgages created before the housing market bubble burst. This quarter instead of using money that was put aside for bad mortgages they were able to remove 1.4 billion because mortgage delinquency trends are improving.  

JP Morgan is also assuming they will be spending less on borrower assistance programs. In addition to recovering those losses, the bank reduced the amount of damaged mortgages it assumed it would buy back from Fannie Mae and Freddie Mac by $216 million.

In general, experts are reluctant to say that the housing market has recovered. Things are looking better though. This April, the Case-Shiller Home Price Index rose on a monthly basis for the first time since the home buyer tax credited ended.

Construction on single-family homes and real estate sales contracts have also increased over the past several months. This could be due in part to the record low interest rates at less than 4%. Foreign investors and American investors are pouring money into the housing market with the hope that they will make money on real estate again one day fairly soon.  

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