Housing Offers Hope for the Economy
“We had 48 months of depression in the housing industry,” notes Karl E. Case, co-developer of the Standard & Poor’s/Case-Shiller home price index. “There is no question that we have turned what seemed to be a headwind into a tail wind.”
If his assessment proves true, the economic benefits will be significant with regard to everything from carpet and furniture sales to state and local government spending.
Looking ahead, there may be pent-up demand for housing not from people without it but from existing home owners who want to move but have been waiting on the sidelines until the economy and the real estate sector showed sustained signs of improvement. These consumers might view breaking even on their current residence as an indicator that it is time to trade up.
The National Association of REALTORS® notes that the proportion of distressed sales has been declining slowly as of late, as has the discount that they offer. In December, according to NAR, 12 percent of sales were said to be of foreclosed homes and an equal number were short sales.
Those figures should continue to decrease, as evidenced by Moody’s recent report that the shadow inventory of homes with foreclosures pending and houses already owned by banks but not on the market is declining.
Source: “Housing Offers Hope of Strength in the Economy,” The New York Times (Jan. 25, 2013)
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