Good news is on the horizon for millions of Americans as recent economic evidence indicates the real estate industry is on the road to recovery. In fact, one of the biggest names in the land just offered his kudos for the market’s progress!
During his testimony before the House Financial Services Committee, Federal Reserve Chairman Ben Bernanke reported last week the American housing market most likely hit rock bottom this past year and is expected to get stronger. At one point, the American real estate market had dropped 30% during the country’s financial crisis, Bernanke said.
Bernanke made his positive housing industry announcement as he faced questions from lawmakers during his semi-annual trip to Capitol Hill.
During his panel appearance, Bernanke said that the recent bond buying program known as Quantitative Easing seemed to have had a beneficial impact on the housing market, because it helps people buying new homes or refinancing existing mortgages. In January, the federal government decided to continue to buy $85 billion worth of Treasury bonds and mortgage backed securities per month until there was a significant improvement in the labor market. It has also held interest rates close to zero since December 2008 in an effort to boost the economy. This action, it is hoped, will continue to strengthen the American real-estate market as well as other industries.
At this point, the housing market may actually be one of the high spots in an otherwise-challenged economy. Over the past year, Bernanke said housing prices have inched their way up and he has seen significant improvement in the new home construction industry.
While the number of home foreclosures is still considered high, banks have seen a recent decline in the number of homes lost as well as the number of mortgage holders deemed underwater, meaning they owe more on their home loan than the property’s worth.
While he was hesitant to make any long-term predictions, the Federal Reserve Chairman said he views this recent news as a step toward positive housing growth and recovery. Record-low mortgage rates and increasing home prices are expected to help mend the industry.
David M. Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices said home prices ended 2012 with solid gains. According to a recent S&P Dow Jones Indices press release, average home prices at the end of the fourth quarter of 2012 across the country returned to autumn 2003 levels. While this may not seem like growth to some, this is actually substantial improvement for at the end of the fourth quarter of 2012, the National Index was 7.3% above the fourth quarter of 2011.
Several U.S. cities in particular saw significant increases in housing prices. Atlanta and Detroit, for example, announced their largest year-over-year increases of 9.9% and 13.6% since the beginning of their indices in January 1991. Dallas, Denver, and Minneapolis posted their most substantial increases since 2001. The city of Phoenix continues to improve as it announced a 23% year-over-year return.
The marked improvement in the real estate market will help more than future homebuyers and sellers. A stronger housing industry has the potential of impacting the American job market. After all, as people buy and sell homes, the home construction and retail industries will continue to flourish which, hopefully, will have a domino effect for the rest of the economy.
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