Housing: Some Good News for a Changeby Tim Manni
While no one is ready to call the bottom of the worst housing collapse in decades, there were glimmers this week that the severity could be waning.
Reports Tuesday showed the glut of newly built homes on the market fell to a five month low last month, while the decline in home prices is starting to ease, and in some cities values are even starting to rise. What’s more, existing home sales rose slightly from June to July, according to data Monday.
“The bottom of the housing downturn is coming into view,” said Moody’s Economy.com Chief Economist Mark Zandi.
It’s still a long road ahead for the housing market. As the housing crisis turns around in the coming months, other economic factors could continue to hamper its comeback. Unemployment, increased lending restrictions, and inflation coupled with a lack of wage increases, are all obstacles that consumers and the economy must first overcome.
As consumers once again become acclimated to the home buying market, home prices will begin to stabilize as already seen in some areas throughout the country. Home prices have become a double-edged sword — while cheaper prices have attracted buyers, cheap and foreclosed properties can devalue neighborhoods. On the other hand, according to Forbes, cities like Los Angeles that have been marked by foreclosures, have seen an increase in the sale of foreclosed and reduced-priced properties — which will aid in the stabilization of those neighborhoods.
Consistency is key. Just as the economy as a whole has technically avoided a recession but remained dangerously close, sporadic good news from housing reports have kept the industry from going under. These good reports must persist over time. If buyers continue to take advantage of cheaper foreclosed properties, they will help create a healthy turn-over rate in the market. Stabilization of home prices, decreased housing inventory, and hopefully a softening of mortgage rates will begin to nurse the housing market back to health.