Why The Property Market Is Poised To Enter "Virtuous Cycle"

Property Market is Poised to Enter a "Virtuous Cycle"

sharp climb“It’s for real. This is absolutely for real,” says Susan Wachter, professor of real estate at Wharton. The market (housing), she says, is poised to enter a “virtuous cycle” where positive trends will spur more positive trends. “This market recovery will continue,” she says, predicting that rising prices will prod potential buyers to buy before prices go up more. That demand will nudge prices up, drawing in even more buyers. (Source: Knowledge @Wharton)

The S&P/Case Shiller 20 city home value Index increased by 5.9% through July from the start of the year. It is 1.6% gain on a month-to-month basis and the highest level in two years for single family homes.

The FHFA House Price Index increased by 3.7% in July on a year-over-year basis.

While home prices continue on the path their modest increases, the consumer confidence jumped to 70.3 in September, its highest level in 6 months. According to the report released by Bloomberg.com, the housing market turnaround and a positive outlook on job growth contributed to the consumer optimism.

The five leading banks managed to trim down the massive shadow inventory by 1.2 million by opting for short sales. The Housingwire report released on Shadow Inventory predicted that the numbers could reach as high as 950,000 for foreclosures and 670,000 for short sales by the end of the year, and this should prevent any negative pull on the housing industry.

In his September Forecast report, UCLA Anderson Forecast Senior Economist David Shulman says the strength in housing is underpinned by gradually rising home prices, record low mortgage rates, improved household formations and modest employment growth.

There is optimistic outlook all around, and HomeUnion®’s strategy is to bet on cash flow from rental income and long term price appreciation.

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