Here's some more good news for the housing market: thanks to the European debt crisis, mortgage rates are at historic lows. The current average rate for a 30 year fixed is 4.87%, per Bankrate.com. That's the lowest rate for the last 30 years.

Even jumbo rates (loans in excess of Have fallen. The 30 year jumbo is an average of 4.5, down from nearly 6% this time last year. If you believe Moody's (and after the CDO ratings mess, I would take their pronouncements with a grain of salt), "It's the best time in our generation to buy...mortgage rates are so low and home prices down, and lots of inventory, you couldn't pick a better time to buy or re-fi".

The question is how long will these rates last. "I think they won't last much longer than a month or two at the best. I can see them going up to 5.5% by the end of June, if not sooner" says Lawrence Yun, chief economist at NAR. Yun says the worries over Europe will be fading soon and investors will be looking at other assets besides Treasuries. And, of course, the U.S. deficit will push up Treasury yields at some point. A quarter point rise in interest rates can raise the monthy payment by $1,100.

Real Estate Market Picks Up!

Realtors always say that the market can turn on a dime, and we have really seen that on the Mid-Peninsula in the last few weeks! We are going into the 10th month in a row of increased sales activity vs. the year before, and prices are steadily inching up:

Average Closed % of List Price

2009 Price DOM Sales Inventory Received

January $1.552 52 12 85 95%

February $1.465 64 14 124 96%

March $1.391 53 24 140 98%

April $1.536 65 29 161 95%

Average Closed % of List Price

2010 Price DOM Sales Inventory Received

January $1.396 65 22 76 98%

February $1.634 64 22 80 97%

March $1.645 62 27 89 99%

April $1,707 37 32 96 99%

Days on Market (DOM) is a key indicator of market strength. % of List Price Received is also key, and I believe will be over 100% when the May data is in.