Although the housing market has been treading water, the forecast ahead is somewhat promising. Certain communities are forecast to start growing in appreciation in the following year.
However, it is important to note that several factors including interest rates, commercial construction, and regional development and politics certainly impact the trend.
One promising sign that both the economy and overall real estate market is bouncing back is an increase in single family home construction. According to the National Association of Home Builders Association, construction on single family homes has increased by nearly 4.5 percent.
Construction of single-family homes rose in every region except the Northeast. The good news is we are starting to see some signs of recovery. The signs are also visible, however, in the development of multi-family dwellings. Construction on these types of homes saw a 3.4 percent increase over the previous year.
There are also promising signs in Builder’s Sentiment. For the fourth straight month, the National Association of Home Builders and Fargo Housing Index rose to 25 this month. In addition, expectations in future home sales are at the highest since the middle of 2009.
Political Influence on Housing
Uncle Sam, or at least our elected representatives in Washington D.C., also play a big role in the success of the housing market. The Federal Reserve Board released the minutes from their Federal Open Market Committee meeting. The review examines the nation’s economic condition between the months of November and December.
In terms of real estate, a simple review of the minutes indicates an uncertain future. Though the economy is showing signs of improvement, there is still weak demand and the depressed undertone surrounding the increase of foreclosed properties. Financial regulations and legislation regarding lending efforts will also affect the market’s performance.
The Future Outlook
According to a Market Pulse report released by Core Logic, this year can be the year realtors have been waiting for. The study expects home sales to see a rise in between 2 to 5 percent. Though the increase doesn’t appear substantial, there are no signs indicating home prices will slip even more than they already have. Additionally, home builder confidence is higher than at its ever been since 2007, when the housing market and economy started to take a toll.
Forecasters also expect 2012 to be the strongest home construction year, since 2008. As previously stated, home sales are expected to surge between 2 to 5 percent on a year to year basis. However, according to a report conducted by the Mortgage Bankers Association, about 80 percent of households in the country are confident that this is the best time to buy. Sellers, on the other hand, are not as confident. Only about 7.5 percent of people who responded to the same survey said this was a good time to sell.
The performance of the real estate market depends on a number of factors. Looking at consumer and builders’ sentiment and statistical data can help provide a glimpse of what 2012 will really look like. However, it is important to note that other factors, such as politics and project demand, are also a big part of the equation. Recent studies indicate the economy and housing market will start seeing a significant turn-around this year. However, the only way to find out if this prediction has merit is to review the performance of different regions. What do you think the market has in store for homes in your area?
