Home grown

for-sale-sign-newton-mass-8b22571d88f8a049
Sponsored By:

5 Reasons the Current Housing Recovery is Strong and Sustainable

The real estate scene and current housing recovery is a crucial area of interest for all corners of the economy.

A home is the single largest investment most Americans make, and anyone with a property that’s “under water” has a hard time spending if they owe more than their house is worth. As for businesses, financial stocks need mortgage lending to recover in order to recover themselves, and everyone from homebuilders to home-goods retailers to handymen need a stable housing market to find more customers.


Click to Enlarge
Need proof? Check out the relationship between housing starts and unemployment. As housing crashes, unemployment soared.

Thankfully, things are looking up for housing — and subsequently for the broader economy.

Here are five recent data points proving that fact.

Housing Starts Up: Housing starts soared 12.1% in December above the same month a year ago, above expectations and the fastest pace of building since the summer of 2008. The growth to close the year pushed 2012’s total starts up to a 28.1% increase over 2011’s total in the calendar year.

Permits Up: Future growth bodes well too, based on permitting. Though December saw a modest 0.3% rise month-to-month, permits tallied a 28.8% increase over the previous year. The rate topped Wall Street forecasts.

Rates Near Record Lows: Also good for future homebuying trends is the continued record low rates for mortgages. A 30-year fixed is now 3.38% according to Freddie Mac and a 15-year fixed is a stunning 2.66%. The lowest rates ever recorded are 3.31% for a 30-year and 2.63% for a 15-year, so we could see new low-water marks soon.

Repossessions Drop: OK, but what about the dark side of the housing market? Well 2012 saw a 17% drop in bank repossessions according to RealtyTrac, and a 3% decline in foreclosure-related filing activity. So not only are qualified lenders buying houses again, but troubled loans are becoming less of a drag.

“Shadow Inventory” Mending: Distressed properties somewhere in the foreclosure process — sometimes referred to as the “shadow inventory” because they are technically not for sale yet but are clearly going to be on the market soon — have been another dark feature of the housing crash. But according to industry reports, the shadow inventory hit a three-year low last year and the latest figures show continued improvement with a 12.3% year-over-year drop.

So there you have it. The current and future market for homes seems strong and the distressed areas of the housing market continue to show improvement. These are all very bullish signs.

Related Reading:

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. 

Get The Slant delivered to your inbox every day!

Comments