Just How Fast is the Housing Market Recovering? If you’ve been keeping up with the news lately, you’ve been hearing reports that the nation’s housing market is on the upswing. Homes are starting to sell, prices are starting to go up, and some buyers are even getting into bidding wars over homes that they love! But just how fast is America’s housing market recovering? What if you’re thinking about selling? Or buying? When will you see significant progress where you live? Well, it’s hard to narrow down specific gains by location. However, the experts seem to think that we’ve turned the corner as a country. That means much better things could happen in 2013!
But why now?
There are a couple of reasons. The first is that we have “cleared out the weeds”, so to speak. Think of your backyard – when you get rid of all of the weeds, it gives the healthy grass room to grow. America’s housing market works the same way. Economists say that we have gotten rid of the homeowners who never should have been given mortgages in the first place. As a result, we have fewer homes going into default, which means we’ll have fewer foreclosures to worry about down the road – meaning there will be fewer homes to drag down the median sales prices around the country later. Second, inventory around the country is down. With fewer homes available – but the demand for housing going up – sellers can charge more. As other homeowners see selling prices go up, it encourages them to list their own homes for sale, which gets the gears moving, so to speak. And, in the process, it increases home values for owners who have no interest in selling their homes anytime soon – so it’s a win-win!
So, when you look at it that way, America’s housing market should be back up and running at full speed soon, right?
Well, not exactly. Remember, the housing market took a major hit when the bubble burst a few years ago, and that’s something that you can’t dig out of on a dime. In fact, Robert Shiller – the co-creator of the S&P/Case-Shiller Index of property values – says it could be quite some time before the housing market is officially deemed “healthy”. Shiller says he would be happier with the strides the housing market is making if so many of the mortgages weren’t being supported by the federal government. Remember, even though they’re technically being underwritten by private lenders, a large chunk of America’s mortgages today are being insured by the FHA. And, the Federal Reserve is using its Quantitative Easing program to keep interest rates low, in an effort to give people an incentive to buy homes. As Shiller puts in, “It’s a very abnormal market. There’s a lot of uncertainty going forward.”
So, is Shiller contradicting other experts’ predictions for recovery?
No. Instead, he’s taking a more guarded approach. Shiller points out that America’s gross domestic product has been growing for the past several years – it’s just been doing so at lower-than-normal levels. He believes we’re on the right path; he just believes it’s going to be a slow process. And, quite honestly, after all that we’ve been through, you can’t ask for any more than that!
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