“The key factors behind today’s price gains are job growth, falling vacancies, and–above all–rebounding from the huge price declines of the housing bust.” – Jed Kolko, Trulia’s Chief Economist
The big question in any investor’s mind will be if the housing recovery we have seen so far for this year is temporary due to various factors or if it is sustainable. According to an article released by DSNews, the analysts of Capital Economics believe that the modest recovery trend will continue if the mortgage lending standards are slightly loosened. The economists forecast further price growth of 5 percent in each of 2013 and 2014. The report raises the concern on the recovery’s dependence on investors and cash buyers and adds that there was no contribution to the recovery from the regular mortgage buyers. It is becoming apparent that the deeply discounted foreclosures and cheap properties are disappearing faster than expected.
There have been positive reports on the overall Economy too. Private residential construction spending measured by NAHB rose 3% on a month-to-month basis in October 2012.
Economic activity as indicated by ISM Non Manufacturing Index rose in November for the 35th consecutive month. The 11 non-manufacturing industries reporting growth in November are: Agriculture, Forestry, Fishing & Hunting; Utilities; Retail Trade; Real Estate, Rental & Leasing; Finance & Insurance; Public Administration; Construction; Health Care & Social Assistance; Professional, Scientific & Technical Services; Information; and Other Services. The weekly US Unemployment Claims dropped 25,000 to a seasonally adjusted 370,000. The unemployment rate is expected to remain steady at 7.9 percent. Gallup reported that US Economic Confidence was better in November than in any month since it began tracking confidence daily in January 2008.
PRICE AND INVENTORY
According to CoreLogic Home Price Monitor report, home prices nationwide, including distressed sales, increased on a year-over-year basis by 6.3 percent in October 2012 compared to October 2011.
The company research further reported that the October Foreclosures numbered 58,000 down by 17% on a year-over-year basis and down by 25% compared to September 2012.
“A lower foreclosure inventory is a good indicator of improving housing markets,” said Anand Nallathambi, president and CEO of CoreLogic. “The downward trend in foreclosure inventories over the past year is yet another signal that a recovery in housing is gaining traction.”
Trulia reported 3.8% increase in November in asking prices for homes compared to last year.
Freddie Mac ‘s 30-year average fixed mortgage rate is at 3.34%, and the 15-year rate is at 2.67%.