Hi everyone,
Jeff Rutt here. As we all know 2012
turned out to be a good year for the housing industry and it looks as though
things could continue to stay positive through 2013. According to the report
below, overall home sales are at their highest rates since before the
recession. More home sales means more competition and higher home sale prices
for sellers. This is excellent news for builders or individuals looking to sell
their existing homes. I hope you will enjoy reading the article below.
Many Blessings,
Jeff Rutt
Housing emerges as economic bright spot after years in
the dark
The nation’s
housing market is surging again after years of historic declines, and the
unique forces powering its return could last well into 2013.
The number of
homes for sale is at its lowest level since before the recession, sparking
competition among buyers that has led to 10 straight months of price increases.
The volume of activity is the highest since 2007.
U.S. home
prices were pushed higher by rising sales and a tighter supply of available
homes.
Builders broke
ground in December on the most
new housing developments in four years. And interest rates on mortgages are
expected to remain near all-time lows through much of the year, galvanizing
once-skeptical buyers.
Together, those
factors have helped the beleaguered housing market regain its footing and
emerge as one of the economy’s bright spots this year.
“I said to my
husband, ‘We’ll never see this again in our lives,’ ” said Tracy Lamb, who
recently purchased a three-level home in Gainesville, in Prince William County.
“I really did feel like we were going to miss out.”
Industry
experts caution that the market’s recent strength does not signal a return to
the heady days of the housing boom. Nearly 11
million homeowners are still underwater, owing more than their homes are worth,
and prices remain well below their peak in 2006. Government data showed a
larger-than-expected drop in the pace of home sales last month. The Federal
Reserve has begun debating when to withdraw support
for the mortgage market, and economists expect interest rates to rise before the
end of the year, potentially tempering demand.
But there is
growing consensus not only that the bottom has been reached, but that the
housing recovery is real. In the Washington area, that translates into
construction crews again mobilizing in some of the region’s hardest-hit
counties. In Lamb’s burgeoning community of Madison Crescent, workers shrugged
off the snow last week to install wiring and plumbing in a row of new
townhouses. The single-family homes across the street sold out this month.
The return of
real estate marks a key milestone in the country’s economic recovery — and not
only because it was at the root of the collapse. A healthy housing sector could
boost gross domestic product by more than $400 billion, based on housing’s
historical portion of the overall economy. It is also a major source of new
jobs in construction and indirectly supports industries as varied as retail and
local government.
Mark
Granville-Smith had planned to build a high-end community called Gaslight
Landing on the banks of the Occoquan River in Prince William, where his
company, Classic Concept Builders, has worked for more than two decades. He
sold six units during the height of the housing boom — then the project stalled
as the industry imploded. With the county processing as many as 700
foreclosures a month, there was little appetite for luxury townhouses with
elevators and boat slips and price tags reaching nearly $1 million.
But
Granville-Smith said he began getting calls from interested buyers again this
past summer. So he called the construction crews back to work and sold four
homes within three months. He recently got a request from a prospective
purchaser in Michigan for a waterfront lot.
"The market’s
reached a price point where it’s economically feasible to build again,” Granville-Smith
said. “We’ve gotten a tremendous amount of interest.”
Housing
historically accounted for an average of 4.8 percent of the country’s economic
output but has been contributing only about half that amount since the
recession. The gap between the industry’s normal output and its current
activity is $413 billion, translating into a 2.6 percent boost to GDP.
Particularly
important is the role of new-home construction, a significant creator of jobs.
Home construction jumped
28 percent last year,
helping to drive a rebound
in hiring in a sector
that was decimated during the recession. An analysis by the National
Association of Home Builders, a trade group, calculated that each new home
generates as many as three jobs.
Local home
builder Miller & Smith employed about 150 people during the boom, then
slashed its staff to 80 in the midst of the bust. Now the company is back up to about
100 employees and hopes to hire four more this month.
“It’s been a difficult six years,” said Dale Hall,
vice president of operations. “It’s been enjoyable to watch the turnaround.”
That doesn’t mean there haven’t been reality checks.
The Mortgage Bankers Association reported that applications for mortgages
dipped in December. Sales of existing homes also declined last
month, though prices continued to increase. And an index of pending home sales fell 4.3 percent in
December when economists had expected it to remain flat.
“We believe the disappointment represents just a brief
lull in what are volatile data rather than a fundamental change of direction,
but, of course, that remains to be seen,” said Jim O’Sullivan, chief U.S.
economist at the consultant firm High Frequency Economics.
Part of the problem may be that many households,
because of tighter credit requirements, are unable to take advantage of low
interest rates. The Fed will probably discuss the state of the housing sector
during its regular policy-setting meeting this week, though it is not expected
to begin pulling back on its support of the mortgage market yet.
Some analysts say the weak December results are
actually a symptom of limited supply rather than slackening demand — the
inventory of homes on the market dropped 8.5 percent last month to the lowest
level since May 2005.
In addition, the pipeline for new homes has been
constricted. In Prince William, for example, government data show that more
than 5,000 applications to build new homes were filed in 2004. Last year, that
number was about 1,200.
Hall said his company has focused on finishing
projects started during the boom. It is scouting for sites to build new
developments, but the permitting and approval process can take two years or
longer.
Buyers may not be so patient. Traditionally, the
real estate season does not start until March. But Hall said Miller & Smith
has already booked 40 home sales this month, making it the company’s best
January since 2005.
“I think the kickoff has already started,” he said.
Thanks again
for reading, stay tuned for more articles and comments-Jeff Rutt
