It’s been as long as seven years since the most awful housing market collapse in the American history which led to a financial crisis around the world. With Lehman Brothers declaring bankruptcy along witha string of other financial institutions joining them, including Bank of America, J.P. Morgan, Wells Fargo and more, the government stepped in with a chain of acquisitions and mergers. The real estate suffered terribly as home prices started to drop, foreclosure rates scaled Castle Heights and towards the close of June 2010, the scenario was estimated that almost all American homeowners were neck deep in water – a situation where a home’s total value was less than its mortgage outstanding value.
Now; fast forwarding to the year 2014. Is the real estate recovering or has it recovered already? If you are not sure whether you want to listen to economists and other real estate experts who say they can see the future, here are some ways that can help you make up your own mind.
Pending Home Sales
As per the National Association of Realtors, the number of houses that are under contract (pending home sales) rose to 8.2% in February and the statistics are quite promising with the index showing the most recent month raising to 17.3% compared to last year.
The starting of several residential construction projects is a good indicator that the housing market is looking good. The commencement of such projects is a great indicator that the economy is improving and the real estate market is on the recovery phase.
According to the National Association of Home Builders, new home sales recorded a total of 308,000 in February. However, this is quite low when compared to 1.28 million home sales in the year 2005. The good news is that the record showed an increase by 20.8% in the West which is one of the hardest hit real estate prices. Moreover, nearly 5,000,000 existing homes sold in February, which was 4.7 million last year.
Housing Market, As Per Several Real Estate Observations:
- Housing prices will carry ongrowing, but at lower pace than 2013.
- Purchases will dictate Mortgage rates rather than refinance activity.
- As housing prices rise, homeowners who were affected with the recession will finally be able to sell and buy properties.
- Price hikes and home sales will curb with high mortgage rates, to a more sustainable level.
- Increase in new constructions and low investor purchasing will balance Low inventories.
We predict home prices to fall back in place in 2014 as per historical norms. National home prices have now recovered from the over correction that resulted from the overall economic recession. With prices coming back to track and a broader economy, we believe that the national home prices in 2014will come back to the historical rates of growth of 4 to 5%.
However, it’s important to remember that the housing market has been making a slow and steady come back since the recession that led to a rapid decline in home prices and several foreclosures.