Is Real Estate Recovery Right Around the Corner?

February 10, 2012

in This Week in Real Estate | Tagged , , , , , ,

55+ Consumers Boosting Builder Confidence

A new index by the National Association of Home Builders show there’s optimism in the market for single family homes targeting the 55+ consumer. The measure takes into account builder sentiment based on current sales, prospective traffic and anticipated sales for six months.

real estate recovery 300x200 Is Real Estate Recovery Right Around the Corner?

Builder confidence in the segment increased four points to 18 when compared to the same year-ago period, according to NAHB. That’s a good bump, but the celebrations remain on hold. The economy still continues to slow down any aggressive growth.

“We are seeing increased optimism from builders in the 55+ housing segment,” said NAHB Chairman Bob Nielsen, a home builder from Reno, Nev, in a statement. “However, the market still remains weak as many people in the mature-market sector are hesitant to buy. They are concerned about selling their existing home at a fair price, due to low appraisals, an abundance of foreclosures and tighter mortgage lending criteria.”

Tight lending procedures, plummeting prices and low appraisals have hurt the market throughout all segments. At a time when many homeowners owe more on their properties than what they are worth,  consumers are anxious about investing in another home. Any progress in the market will be very slow, expert say.

“As with the overall single-family housing market, we are seeing gradual, but steady, improvement in the 55+ market segment,” said NAHB Chief Economist David Crowe. “A level of 18 in the 55+ HMI is the highest fourth quarter reading since inception of the index in 2008, but still a long way from a healthy housing market.”

Market Turnaround Expected This Year

Is a solid recovery of the housing market just around the corner? National Association of Home Builders Chief Economist David Crowe thinks so.

A turnaround will happen this year with a solid recovery next year, Crowe said in a forecast. Sales numbers for new homes are expected to be better than last year although still below the level that’s considered a sign of a healthy market.

“I’m looking at 2012 as sort of a ramping event to get a much more solid recovery in 2013,” Crowe told the Associated Press.

A falling jobless rate and other positive economic indicators are making many economists optimistic about the housing market, the AP said.

If jobs grow, unemployment stays low and lenders loosen regulations, Crowe expects sales of new single-family homes to rise 19 percent to 360,000. Next year he expects sales to shoot up 40 percent to 505,000 in the same segment, the AP said.

While that’s awesome news, it’s still way below the 700,000 mark considered the sign of a healthy market. The road to a recovery will not be a short one, but it looks like the market is finally picking up some steam.

$25 Billion Settlement to Help Recovery

This week, the government announced  a $25 billion settlement with the five largest banks in relation to alleged foreclosure abuses and robo-signing of documents.

Much of the money – $20 billion – will provide relief to struggling homeowners. The remaining $5 billion will assist federal and state foreclosure relief programs, according to a Seattle Times story.

About $1.5 billion will benefit 750,000 consumers who lost their homes to the foreclosure crisis, according to abcnews.com. Some of the money will provide relief to a million homeowners on the verge of foreclosure by reducing their loans.

The deal is expected to help inject some life into a struggling housing market, whose recovery seems to be taking longer than expected. Forty-nine states are part of the settlement that involved months of negotiations between government officials, banks, state attorneys general and consumer advocates. Oklahoma struck a deal separately.

Although the agreement was the largest government-industry settlement since the 1998 tobacco-industry deal, some are saying it’s too little considering the impact on homeowners.

“The deal announced today is too small,” said Pico National Network, a faith-based group active on housing issues, according to the Seattle Times.

“It falls far short of providing real justice for homeowners and American families.”

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