Across the housing industry, the cautious consensus seems to be that the market rebound is steadily moving forward.
Market is 52% back to “normal”
This month Kolko posted about Trulia’s Housing Barometer, which looks at three indicators — construction starts, existing home sales and the delinquency-plus-foreclosure rate — and compares them to both their worst level and to their pre-bubble “normal” levels.
The December 2012 barometer indicated positive signs:
- Construction starts were at a 54-month high, the highest since June 2008 — putting construction starts 47% back to normal
- Existing home sales were down slightly — dropping about 1% from the previous month, existing home sales were still at their second-highest level since November 2009 and if distressed sales were left out, home sales were up 26% year-over-year in December
- Delinquency + foreclosure rate was steady — just barely down from the previous month, December’s rate of mortgages that were delinquent or in foreclosure is the lowest it’s been in four years, and 41% back to normal
Taken together, these three indicators show a market that is 52% back to normal — compared to just 27% back to normal in December 2011.
(Read Jed Kolko’s complete article on The Huffington Post, here)
Home prices increase is the biggest in 6 1/2 years
According to CoreLogic, U.S. home prices rose 7.4% in November 2012 — the largest annual percent increase in six and a half years. Rising home prices are considered to be key to the housing market recovery. CoreLogic is forecasting home prices to continue to rise in 2013 by another six percent.
Lead with your head
Even as many indicators — including data for housing starts and permits and the National Association of Home Builders/Wells Fargo Index of traffic of prospective buyers — show the housing market is recovering, experts recommend that home buyers and sellers make strategic rather than speculative decisions.
Robert Shiller, professor of economics and finance at Yale and one of the economists behind the S&P/Case-Shiller Home Price Index, wrote the following last week in The New York Times,
The bottom line for potential home buyers or sellers is probably this: Don’t do anything dramatic or difficult. There is too much uncertainty to justify any aggressive speculative moves right now. If you have personal reasons for getting into or out of the housing market, go ahead. Otherwise, don’t stay up worrying about home prices any more than you do about stock prices.
(Read Shiller’s full article on The New York Times, here)