Positive Trends: is the Housing Market Headed for Recovery?
By Deanna Sletten
Photo: © Gavril Margittai - Dreamstime
After four months of rising home sales, the housing market is looking brighter. The National Association of Realtors reported that between April and July existing home sales experienced increases each month with July leading with a 7.2% increase. It has been five years since the real estate market has seen such an upward trend and it has led many in the industry to believe that the market has finally bottomed out and is heading for recovery.
Sales of Foreclosures Led the Way
Many factors prompted the rise in sales over the past four months. Sales of foreclosure and distressed homes were up 31% in July because of their affordability. First-time home buyers accounted for 30% of the July sales so they could qualify in time for the $8,000 tax credit. Low mortgage interest rates also contributed to the surge in sales. With a market full of affordable homes to choose from and low interest loans available, home buyers are
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taking advantage of the deals and buying nicer homes they might otherwise have not been able to afford.
Where Recovery is Felt the Most
Thirty-nine states saw sales increase over the last two quarters with some states, such as New York, Hawaii and Wisconsin, seeing an increase of 20% or more. Sales varied depending upon how heavily the areas were hit by the real estate crash. California, Michigan and Colorado saw a drop in sales by 6% even though other states saw increases in sales. In cities like San Diego, Phoenix, Orlando and Las Vegas where house prices have dropped significantly while incomes have stayed the same, the demand for foreclosure and lower priced homes has soared. Experts agree that the recovery will be slower for some areas than for others depending upon how hard the area was hit.
Will the Recovery Continue?
Even though the housing market looks as though it's on the way to recovery, experts caution that it may not see a significant upswing until the early part of 2010 when the economy is expected to pick up. Another factor that may help the recovery is dependent upon Congress extending the first-time homeowner tax credit past the November 30 deadline and into 2010 which is being lobbied for by two national organizations.
A total housing market recovery is dependent upon how quickly the economy picks up and how long interest rates stay low. But for now, economists are encouraged by the continued increase in sales and believe that the housing market is heading toward a recovery. |
