STARS ALIGN FOR BUYERS

Interest rates below 5% & prices bottoming out in the 1ST half of the year will drive 2 of the 3 main ingredients for buyer affordability to cyclic lows next year, Freddie Mac's chief economist said yesterday. "Buyer affordability is at the highest level in decades," said Freddie's Frank Nothaft. "With affordability high, many 1ST-time buyers will be attracted to the housing market in the new year, likely translating into more home sales in 2011 than in 2010." Though they will rise above their present level, he expects rates on 30-year fixed-rate loans to remain below 5% throughout the year. As for home prices, price indexes for the U.S. as a whole are likely close to bottoming out. The National Association of Realtors' Affordability Index for the 1/3 quarter reported one of the most affordable buying markets since the inception of the index in 1971, he noted.

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