Much scrutinized (and often demonized) mortgage loan enterprise Freddie Mac just released its February 2013 U.S. Economic and Housing Market Outlook. The contents of the report echo analyst sentiment from the past two months- namely that the housing market appears to be recovering with some fortitude, and that health in the property sector is less regionally segmented. Disclosing its findings through a MarketWatch press release Freddie Mac’s report centers around the following conclusions:
1) The Housing Market Is Clearly Recovering
Freddie Mac’s report unambiguously states that projected 2013 housing starts will hit nearly one million units. Housing starts are predicted to rise to 950,000 total units this year, which represents a 22% rise above the figure recorded in 2012. This is a substantive improvement over last year’s tally, which in and of itself exceeded the sum recorded in 2011. Americans are buying houses again, and while certain regions are receiving more purchase volume than others, it has become a nationwide trend. Speaking of regional particularity…
2) The Housing Recovery is Nationally Comprehensive
Considering that certain areas of the country took the hardest hit in terms of real estate values and buyer interest, it only makes sense that the recovery might be regionally lopsided as well. As I’ve mentioned in other posts, certain sales regions have been making a particularly sharp recovery as of late. More cautious analysts are questioning the endurance of the recovery in these particular metros. Taking these areas of unease as granted considering how lukewarm overall market growth remains, the Freddie Mac report noted that increases in home values were observed nationwide. While some of this could be credited to the “nowhere to go but up” status of hard-hit cities like Phoenix and Las Vegas, we’re nevertheless seeing regionally comprehensive value appreciation.
3) There’s Still More Room for Growth
While the Freddie Mac report noted an increase in home values, it also concluded that values have not increased so drastically so as to discourage purchase. In fact, as the MarketWatch disclosure noted, overall affordability in the nation’s prime housing markets has improved as well. New constructions appear to be on the rise, and these are proceeding in step with sales growth. As home values improve nationwide, homeowners who’d been forced to waylay selling their property due to negative equity are now free to put their homes on the market. As I’d noted in a prior post, the much-dreaded shadow inventory is drying up, leaving less unsold property languishing and deflating prices.
So what’s the takeaway for both investors and homeowners? The big (and most optimistic) conclusion seems to be that a series of factors are set in motion to improve the value of residential property nationwide. Considering the newfound constriction in sales volume, home values have risen and those previously faced with negative equity, or underwater mortgages specifically, are newly in the clear. With a growing number of Americans in a safe place to sell their homes, we’ll likely see newfound sales activity. This, coupled with newfound interest in purchasing homes, means that the housing recovery may well become self-motivating. Exempting any major jolts to the greater economy, the housing recovery could well be sustainable.