While the greater American economy has been slowly lifting itself from the recession, the housing market has been particularly slow to turn around.
While the greater American economy has been slowly lifting itself from the recession, the housing market has been particularly slow to turn around. Fortunately, 2012 was an exceptionally positive year for the housing market, and the property sector has become one of the fastest-growing segments of the American economy. In fact, the housing market’s rebound has become so assertive that certain reports indicate housing’s advance has become a growth engine for the economy as a whole. One of the accumulated positives of all this, it seems, is that the American public has become increasingly confident about the housing market’s future as well.
According to new reporting from Bloomberg, Americans are overwhelmingly certain that the property sector will undergo substantive improvement by the close of 2013. As the article notes, those polled believe that the housing market will improve within the next year by a three-to-one margin. While 31% of those polled expressed ambivalence about the housing market’s prospects, a full 50% believe the housing market would improve over the next twelve month against only 16% of those who foresaw negative returns for housing. With metrics derived from a Bloomberg National Poll, statistical analysis points towards a sea change in the public’s attitudes towards the real estate sector.
It’s naturally pleasing to hear that consumer confidence is returning in a big way. However, do the harder statistics validate this newfound positivity? As the Bloomberg report notes, the Commerce Department’s figures for new construction are outstanding. January returned the highest volume of initiated building projects since July 2008, with homebuilders beginning work on a sum 613,000 single-family homes. Housing values have also been rising substantively as well, with one of 2012’s greatest economic victories being the price recovery of large swaths of American property. As I noted in a previous post, much of this can be credited to the rapid purchase of otherwise neglected property working wonders for the supply-demand equation.
Theses are all constructive developments, especially considering that housing’s bubble bursting was held as the epicenter of the financial crisis. Many Americans felt rightly burned when real estate crashed in 2008, with much of the bubbling fueled by undue optimism in the growth endurance of property values. Considering that both investors and private homeowners are hesitant to make fast moves without sound fiscal reason, this shift in sentiment can only bode well for housing’s immediate outlook.
Taking all this into consideration, what may occur now that the American consumer feels positive about the housing market? An increasing number of prospective homebuyers may emerge from the woodwork to purchase new homes. Depressed real estate values had long kept potential sellers hesitant to put property up to market, and in the most extreme cases kept them enwrapped in underwater mortgages and negative equity. With rising home values comes a decrease in underwater mortgages, leaving a larger number of newly sellable homes. Previously reticent buyers may meet halfway with newly confident sellers, a combination that could dynamically propel the housing sector through a second consecutive growth year.