Appreciation rate for homes should stay steady in '99

Real Estate Watch

May 02, 1999

The appreciation rate for homes should stay in the 4 percent to 4.5 percent range despite a predicted drop in sales in 1999, according to a survey conducted by Freddie Mac, a quasi-governmental mortgage company.

"Sales were at all-time records last year," said Robert Van Order, chief economist for Freddie Mac. "Although in 1999 sales will be lower, it will still be a good time for housing."

Van Order expects mortgage originations to fall to $1.4 trillion this year, but "that would still make it the second-highest level of originations in history."

About 52 percent of mortgage originations were for refinancing, according to Van Order, who said he expects refinancings to account for about a third of originations later in the year.

Adjustable-rate mortgages (ARMs) will also continue to garner a small share of the market as long as fixed-rate mortgages stay at their current low levels.

Van Order said ARMs should make up 10 percent of all mortgages this year, but rise to 20 percent next year.

Freddie Mac said it has raised its economic growth projection to 3 percent.

Pub Date: 5/02/99

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