It’s been a long road back up from the bottom to where we’re at right now, and we still have a long way to go to get where we were before the crisis. However, several factors indicate a positive outlook for the housing market in the next few months.
Home Prices and Sales
The last S&P/Case-Shiller Home Price Index showed that prices for homes have gained in July compared to the previous year. All 20 cities showed an improvement from the prior month, and 16 of them showed an improvement from the previous year.
Prices are not the only thing gaining ground; sales have also improved. Sales of existing homes have had a national increase of 9 percent from the previous year. Consistent improvements in both sales of homes and prices are good indicators of a recovery.
Building permits have also experienced an increase, which means more homes will be built in the near future. This indicates that new home builders expect continued improvements and more demand for new housing. In some areas, houses that haven’t even been built are already sold. This shows an increased confidence in home buying and that more people are looking at brand new homes.
What the Future Holds
While all of this is good news and indicates that the housing market is steadily on the rise, it doesn’t mean drastic improvements are in store. The improvements will be modest at best because of other issues, including a lackluster job market and continuing credit issues. Shadow inventory is another concern, as foreclosures are still on the market.
Because of reduced inventory in some markets, experts predict a faster recovery in those areas, since new housing won’t be available for some time. This could mean that areas such as Phoenix and San Francisco could see home values rise at a faster rate than the national average. Notwithstanding, mandatory down payments and tightened lending requirements still prevent potential homeowners from obtaining the financing they need to acquire a house. While the promise of government backed funding for loans will likely result in a further reduction of mortgage rates, the poor job market will delay many buyers from jumping into homeownership.
After looking at all of the data, many experts are saying that the worst is behind us for the housing market, but that the recovery will be slow and steady rather than explosive. Some markets will show a faster improvement than others. Cities like Phoenix and Miami will probably see a much better housing market than places like Chicago and Atlanta that have seen slow improvements.
With low rates and decreased home values, it’s still a good time for buyers to get in the market, and it will probably stay that way for a while. Those looking for the right time to buy a home, now may be as good a time as any.