Housing Market Seems Set to Revitalize Economy

While there has much open discussion since the close of Q3 about the sudden housing rebound, analysts are now coming forward with even more glowing predictions about the status of American real estate. While it’s basic knowledge that the health (or lack thereof) of any major sector can ripple heavily across the greater market, it seems that the U.S. housing market may become a new centerpiece of our economic recovery.

 

As The Washington Post reports, Charles Schwab’s chief investment strategist Liz Ann Sonders has come forward claiming that not only is the housing market in clear recovery, but that it will motivate broad economic growth well through FY 2013. Citing an array of broader market trends, Ms. Sonders maintains that the foundations are in place for the housing market to continue its growth trajectory. In fact, the analysis put forward by Charles Schwab is so optimistic that Ms. Sonders disclosed projections that the housing sector alone could add a full percentage point to growth next year.

 

On further examination, the factors that Schwab and other prominent investment voices highlight as validations of market strength are only growing. The confidence of the American homebuyer is the highest since before the housing bubble burst in 2008. Q3 home closings tallied at the highest quarterly rate since before the recession. Similarly, major banks are reporting a substantial drop in the quarterly rate of loan defaults. The mortgage market is sustaining new vitality in tandem with the rise in home sales.

 

In addition to domestic indicators of sector strength, we’re beginning to see major foreign investment in American property. Capital investment from major international players is an enormous vote of confidence in the health of the United States real estate market, and offers a degree of security (if more symbolic than concrete at this juncture). With the unemployment rate gradually diminishing, and the profitability of American exports on the rise, the housing market may well be the crucial third stabilizer that maintains and strengthens our rise from this recession.

Harrison Stowe is a writer for NVR Inc., a prime developer of new homes in Maryland. Addressing a range of real estate topics including investment, mortgages, and new construction, Stowe combines finance knowledge with additional experience working with Ryan Homes in the current real estate market.