Admit it. You thought it would never come.
It’s been a long time coming—about four years, actually—but it’s finally here. The housing recovery is on.
The market had to shake off the damage caused by the boom and subsequent bust. It also had to clear out that giant inventory of homes sold to—and reclaimed from—people who couldn’t afford them.
But now 2013 is well underway, and several important industry markers suggest we have turned a corner. The gross domestic product is projected to rise through 2014. Because of the improving GDP, the unemployment rate will no doubt continue to drop. In terms of jobs, projections are putting gains at 2.5 million more in 2013 and 2.75 million more in 2014.The economy is getting its second wind and should gain strength in a number of key industries, including the housing industry.
If you work in real estate, you can stop holding your breath now.
Housing starts and home prices are climbing steadily. The improvements aren’t dramatic, but they are solid. Home prices, for instance, should begin posting a minimum gain of 2% or thereabouts in 2013 and about 3.5% by 2014, say economists. Vacancy rates for apartments are going to hold firm for the year (a plus for both the industry and for buyers). Industrial and commercial vacancy rates, on the other hand, will dip slightly. Meanwhile, analysts say all other types of rental property will post gains between 1 and 5 percent.
It won’t be a boom, but 2013 is shaping up to be a good year for a housing recovery.
Forbes.com commented in January that the ongoing real estate recovery is based on three factors: existing single-family home sales and prices, inventory and months of excess supply, and pending home sales. Let’s take a look at these three bellwethers of housing recovery:
Single-family home sales—Numbers from the National Association of Realtors show that sales volume has soared. All areas of the country are reporting gains. Florida, California and Texas are experiencing the highest increases; New York and New England, the lowest. The median single-family home price was $174,100 last month, up 12.6 percent from the year before.
Pending home sales—Again, the numbers are improving. The National Association of Realtors Pending Home Sales Index (PHSI) counts signed contracts to buy homes. The index has spent 20 months at levels higher than the same periods one year earlier. The PHSI is expected to dip soon, however; with the supply of homes costing less than $100,000 dwindling, first-time home buyers have fewer and fewer options and may put off signing that contract.
Inventory levels—The nationwide inventory is sloughing off months of excess supply. In fact, it lost almost 33 percent over a 12-month period. The current inventory is 25 percent below a year ago. The number of homes available for sale is at the lowest level since 1999, when there were 1.71 million homes up for sale. The median time on the market for all homes was 71 days in January, down from 73 days in December and significantly below the January 2012 level, which was 99 days.