Green Sprouts in the Economy and in Real Estate

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Could the headlines cause you to miss a lifetime opportunity?

March 30, 2012|Article by Jeffrey S. Detwiler President and Chief Operating Officer of The Long&FosterĀ® Companies

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Investing in the housing market was once practically a no brainer. Through the downturn, however, many of the fixed  assumptions about housing — that property values would  always rise and equity would naturally grow — became variable, leaving many consumers questioning the extent to which the real estate market was a good investment option for them, or if now was the time to purchase that new home they have always wanted. It also opened the door to years of negative housing headlines in the media, some of which continue today.

The reality, however, is that the indicators we examine to determine the health of the housing market are gaining  momentum. The employment picture is improving, consumer  confidence is increasing, mortgage rates are low and home prices in much of the Mid-Atlantic region have stabilized. These conditions may add up to opportunity, which is why so many qualified buyers, sellers and  investors are looking to evaluate their own equations in the context of the market as it exists right now.

Still, we’re finding that although  the recovery is well under way in  many regions, the mainstream  media has been somewhat slow in reporting the full story. A home purchase for most of us is, first and foremost, a place to live, raise a family and be part of a community. But it’s also an investment that requires  careful consideration as it offers an opportunity to build long-term equity. Being able to read between the headlines may present a  homeownership opportunity unlike any we have seen for  generations, so it’s important to recognize the headlines that  support the green sprouts we’re experiencing in the economy and in the housing market.

THE ECONOMY IS GROWING

In the early months of the year, we’ve seen consumer confidence gain strength and reach levels we haven’t seen for some time. Improvement in the job market is the primary driver in boosting consumer confidence, and we’re likely to see an upward trend as companies continue to expand and add more people to the payroll.

A recent Associated Press survey of leading economists points out that experts believe the unemployment rate will fall from its  current level to 8 percent by this fall, and will likely dip even more by the end of 2013. 

Since last summer, the U.S. Labor Department reports that  employers have added more than 1 million workers to their  rosters. The economy is showing green sprouts in other areas as well — industrial output jumped in the early part of the year, car sales are booming and many experts agree that the housing  market, in many parts of the country, has turned the corner.

HOME PRICES ARE RISING IN SOME AREAS

Most of the time, when we read headlines about sinking home values, we’re absorbing national numbers that incorporate the hardest-hit markets in the country. The reality is that home  prices in many areas of the Mid-Atlantic  region have seen prices stabilize —  and even increase in some areas.

To get a clear picture of home prices in your market, it’s best to evaluate  local-level data. At Long & Foster,  we believe that better market data  results in better buying and selling  decisions, which is why we provide hundreds of publicly-available reports each month to take housing data down to county and neighborhood levels. A professional  Realtor® can provide a detailed assessment for your home or one you are considering buying.  

INVENTORY IS AT MULTI-YEAR LOWS

Throughout much of the Mid-Atlantic region, buyers who have perceptions of the housing market based on national headlines and reports are finding themselves facing  an unanticipated situation — a narrow selection of  inventory from which to choose. All of the major  housing markets in the Mid-Atlantic are currently experiencing  lower inventory levels than we’ve seen in at least two years — longer in some markets. 

For people who have been putting off selling their homes for an opportunity to move up to a bigger or nicer house, the current  situation may present a good reason to reevaluate their options. Currently, many sellers can offer their homes to willing buyers  in the market and move up to homes while prices are still  moderate, but this window of opportunity may be quickly closing as the recovery takes a firm hold.

RATES WILL NOT STAY THIS LOW FOREVER

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