Traditionally in real estate, the spring season is the time of year that things begin to hot up, with big increases in the number of homes being bought and sold. Experts are hopeful that this year’s spring could well be one of the best we have seen in quite a while.
There are a number of signs pointing to a positive spring in 2012: housing affordability is at a record high level, mortgage rates are super-low, inventories are in decline, and finally, the unemployment situation seems to be improving at long last.
Further, we have already seen existing home sales slowly edge up in the past few months, which in turn has led to a decline in for-sale housing inventories. At the last count in December 2011, there were almost 2.4 million units for sale, the lowest figure since 2005 when all of our problems first began.
Even more encouraging is information being received from the National Association of Realtors, whose chief economist Lawrence Yun told the Investor’s Business Daily that home prices in many markets are now stabilizing. In addition, the NAR’s Housing Affordability Index has reached its highest point in more than 30 years, since the 1970s, something that indicates housing to be highly affordable for the average family these days.
For their part, the National Association of Home Builders are also optimistic, predicting an 18% increase in the number of new home sales, following their worst ever year in 2011.
But despite all of these signs, a successful spring showing is by no means guaranteed. The big problem for many remains the strict mortgage lending guidelines that have left many potential buyers in no position to secure credit. Foreclosures too, will continue to be a problem, putting downward pressure on house prices in many areas.
More likely, we are going to see a slight improvement this spring, says Celia Chen of Moody’s Analytics:
“The signals are a little hard to extrapolate, but ultimately by the end of this year we should see the housing market on more solid footing, so we’ll see an improvement but off of very, very weak activity.”