The Federal government’s monthly mortgage bond buying program is keeping interest rates at record lows and drying up supply in the mortgage market.
 
Housing construction could add .4% to US gross domestic product (GDP) and housing price appreciation could add another .2%.
 
Phoenix, AZ has led the country in housing price appreciation with an increase of 22% over the 12 months ending in October.
 
Even so, prices in the area were down 45% from their 2006 high. Inventories in Phoenix dropped to about half of the area’s normal level and rescued almost four million underwater borrowers.
 
Institutional investors like Blackstone, the US’s largest private real estate owner, and Colonial Capital LLC have also competed for a dwindling supply of properties.
 
Foreclosure starts declined 28% in November. As well, the housing market price recovery combined with continued low interest rates could increase the number of borrowers eligible to refinance, causing an early return of principal for bond holders.
 

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