Housing market recovery to last
This week Forbes published an article, link below, suggesting – with data to support the argument – ” that housing is finally shaking off both the Great Recession and the excesses of the preceding housing bubble.”
The article concludes: “we can expect to see more good news coming – most likely when the 2014 spring/summer selling season emerges. It looks as though 2013 could be the pivotal year needed to produce a bright future in housing.”
The housing recovery is a world-wide phenomenon, as I know from seeing daily reports from around the world.
Here is a summary of the article:
1. Sales, inventory and the ratio of sales to inventory have all recovered to pre-bubble levels.
2. New home pricing has passed the previous peak levels, reflecting increased building costs.
3. The ratio of existing home prices to new home prices is around 0.75 compared with a pre-bubble ratio of 0.85-0.95, indicating that further rises in existing home prices are likely.
Increased home prices are beneficial for the following reasons:
1. They create higher confidence and consumer spending, which in turn boosts the economy
2. Rising prices have a beneficial effect on homeowners’ equity
3. Rising prices encourage mortgage lenders to make new loans
4. They make it easier for home owners to move
5. More potential buyers are encouraged to come off the sidelines and act.
The article also points out that distressed sales, which are included in most statistics (but not mine), have affected reported median prices (pushing then down), and that we are now seeing a decline in sales of lower-priced forced sales. This is the phenomenon I have been documenting over the last year or so, as in my 2012 year end review.
Here’s the Forbes article
If you are considering buying or selling a home and have questions about the market and/or current home prices, feel free to contact me on 781.631.1223 or andrew@HarborsideRealty.com.
Andrew Oliver is a Realtor with Harborside Realty in Marblehead.