Will the Housing Market Rebound?

|  May 14, 2010  |    Share

When Will the Housing Market Rebound? 
All the signs are there for continued improvement in the economy as well as housing markets, but it will be several years before real estate practitioners can expect to see markets returning to equilibrium, two of the country's top economists told REALTORS® this week.

By the end of this year, practitioners should see 5.4 million existing-home sales and home price growth of up to 3 percent, said NAR Chief Economist Lawrence Yun.

Already many markets are seeing home price increases, including San Diego, where prices are up some 16 percent. Orange County, Calif., and Boston are two other strong areas, with price increases of 10 percent to 12 percent, Yun said.

Did the Tax Credit Make a Difference? 

The federal home buyer tax credit has been essential for getting buyers back into the market, stabilizing inventories, and shoring up prices, Yun said. He estimated that the credit -- which is available to buyers who had properties under contract by April 30 and who close on their sale by June 30 -- brought more than 4 million households into the market since it was enacted about two years ago. That includes about 1 million who otherwise wouldn’t have bought. 

More fundamental to the improving housing picture is the increasing strength of the economy, which is on track to expand by 3.1 percent this year after shrinking 2.5 percent last year, Yun said. 

With inflation tame and interest rates low, businesses are enjoying robust profitability and their balance sheets are in the best position they’ve been in for years, said Mike Zandi, chief economist for Moody’s Economy.com. That’s helping with employment, which about two months ago turned positive for the first time since the economic crisis began and is now seeing about 125,000 net jobs added a month, he said. 



Source: Realtor.com Magazine