The economic outlook for real estate is never just black and white -- you've got to look at the encouraging signs -- along with the bleak -- if you want a realistic picture.

Take this week's mortgage market numbers: Applications for purchases of homes were up 8.1 percent last week, according to the Mortgage Bankers Association of America's national survey. Purchase applications using FHA-insured mortgages -- the hottest game in town -- were up by 15.2 percent!

Part of the reason for the application jump: Mortgage rates continue to hover just half a point over 40-year lows. Fixed rate, 30-year loans last week averaged 5.78 percent, according to the survey. Fifteen year fixed rates averaged just 5.39 percent.

Still another positive sign: the University of Michigan's latest national study of consumer sentiment found that the percentage of households who believe that homes are attractively priced hit a record high.

The Spring market looks like it's really warming up. Who knows, maybe we're finally turning the corner.

But there's a flip side. The same University of Michigan survey found consumer confidence at a 26 year low! People are worried about recession, about losing jobs. Expectations haven't been that grim since the 1981-82 recession, according to the pollsters.

Here's another troubling development taking shape: Condominiums are about to get tougher to finance. That's partly because of new rules from Fannie Mae and Freddie Mac requiring lenders and mortgage brokers to do extensive and time-consuming research on condominium projects -- things like a project's legal documentation, operating budget, percentage of units behind on condo association fees and percentage of space allocated to commercial uses -- all this before even submitting a condo unit loan application.

Some brokers tell Realty Times they don't have the time or staff to review hundreds of pages of legal documents and operating budgets. Plus they're unhappy that Fannie and Freddie want them to assume all the legal and financial responsibility for the accuracy of the documents, budget figures and the like.

On top of this, some mortgage insurers are tightening up on coverage of condos. One major insurer, United Guaranty, won't even look at applications on condo units after May 1 if they're located in hundreds of "declining" area Zip codes around the country. Other insurers are raising the down payment minimums on condo unit mortgages, making it tougher to buy one if you're short on cash.

So it's a mixed-bag forecast. Consumers do see excellent opportunities in home buying right now. And yes, the mortgage money is there for them at great rates … . But financing a condo could be tougher than you expected.

Published: April 17, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.