With the housing market pacing a rebound, financial analysts are anxious to gauge the pulse of the property sector and determine exactly when real estate investment might become ‘safe’ again. Ever since the value of American property took a nosedive in 2008, analysts have used comparison to pre-crash values as a means to determine market health. While we want to ensure conditions that lead to the crash are avoided, it would still be a relief to see property values recuperate near to what was maintained before the recession.
According to new analysis compiled by MarketWatch, it looks as if the American housing market has turned a half-recovery. Judging by a collection of housing metrics compiled by Trulia- U.S. Census construction data, the volume of sales disclosed by the National Association of Realtors, and national mortgage delinquency and foreclosure rates- the American housing market has rebounded to roughly 52% of the comparative health of the 2007 housing market. The 2008 crash yielded a drop in the property sector’s various economic health metrics, but in analyzing returns from the close of Q4 2012, the housing market has progressed halfway towards the financial markers that defined pre-recession stability.
Taking all this into consideration, the health of the national housing market is a complex value to quantify. The median home price is a risky barometer, since listing price increases can spell positive returns for investors and property holders while yielding adjacent difficulties for interested homebuyers. In addition, it’s become clear that certain regions of the U.S. housing market are recovering significantly faster than others. Considering the push-pull dynamic between property holders and prospective homeowners, certain shifts in the market can yield zero-sum scenarios between sellers, buyers, and investors.
That being said, it has become clear that the greater U.S. economy is beginning to motivate turnaround in the housing sector. With the job market recovering, we’re witnessing a newfound demand for ‘high-expertise’ professional talent. Major investing and finance bodies have actively begun to recruit those with technical knowledge of the real estate sector, which has been matched by a nationwide trend among business schools in chartering real estate MBA programs. Now that consumer confidence is running hand-in-hand with diminished interest rates, Americans are purchasing houses at a volume not observed since the market crash. Ultimately, it seems that property investment is gaining respectability as a safe source of asset growth, with both domestic and foreign speculators looking to acquire U.S. real estate holdings.
So what does this mean for homeowners and real estate investors? On the upside, the recuperation in home prices may cause a large volume of homes to submerge from underwater mortgages. This would encourage property selling, and the sales momentum could slough off lingering market stagnancy. In addition, the fact that the U.S. Census is showing a higher quantity of freshly requested construction permits demonstrates that investment is being allotted towards building residential and commercial property, possibly to meet projected demand. While much of this data is focused on short-term economic measurement, it may not be premature to estimate that the market could regain relative pre-crash stability within the decade.
Harrison Stowe is a writer for NVR Inc., a prime developer of new homes in Beaver County. Addressing a range of real estate topics including investment, mortgages, and the housing market, Stowe combines finance knowledge with his experience working with Ryan Homes in the current real estate market.
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