Housing Market May Show Signs of Stabilizing
by Hiland Doolittle
According to the National Association of Home Builders (NAHB), new housing starts for single family homes increased by 10,000. Overall housing starts fell to a seasonally adjusted record low, the decline was restricted to multi-family units, condominums and apartment buildings. The increase in demand for single family homes was encouraging, but tempered. “Although housing starts may have found a bottom, a strong rebound in construction is unlikely. The glut of homes is so large that a typical early-cycle rebound in homebuilding looks far out of reach,” said an analyst form Moody’s.
The problem is the surplus of unsold, existing units flooding real estate markets. The excess inventory is driving prices down throughout the housing industry. The National Association of Realtors (NAR) indicates a high percentage of current pending transactions are distressed sales or foreclosures.
In addition to an over-supply of existing homes, there remains a surplus of homeowners waiting to put properties on the market if price shift upwards. The average American homeowner buys and sells a home every seven years.
While some investors are acting on distressed sales, first homebuyers are beginning to take advantage of the Obama 2009 First-Time Home Buyer Tax Credit. Revisions to this incentive-based plan have been widely accepted. Unlike the 2008 tax credit for homebuyers, the new version does not require repayment.
The NAR reports that the credit can be utilized toward fulfilling the down payment requirement. This clears a major stumbling block for first-home buyers.
JPMorgan Chase issued the following overview of the April housing data. “The housing market is showing signs of stabilizing. Single-family housing starts have not budged in two months. New home sales are up from January’s all-time lows. We are not ready to call the bottom yet, however. The economy is still shedding jobs at a frightening pace and credit remains tight. For April, we project that housing starts were unchanged, with a small drop in single-family starts offset by an increase in multi-unit starts. Permits will improve on an increase in multi-unit permits.”
Overall, interest rates are favorable, prices are down and conditions for buyers are the best they have been in years. At this point, the housing market is about job security. Buyers with solid employment are in the drivers seat. They just may be the force that drives the economy out of the recession.
About the Author - Hiland Doolittle
Hiland is a professional writer with extensive entrepreneurial experience. He is a graduate of St. George’s School Newport, RI and the State University of New York at Albany where he majored in history. He has been active in the real estate business for 30 years and has founded and sold several businesses.
Hiland currently writes for several financial sites and is a published author of the novel The Last Parade. He has recently completed a manuscript for a children’s book entitled Sami and The Minnow Man.
