7 Encouraging Statistics About Housing in the U.S.
With the housing bubble on your mind, you may be wary of the current state of housing in America. However, over the past couple of months, housing statistics have taken a surprisingly positive turn. Cringe-worthy numbers of past years have finally begun to let up, providing homeowners and prospective buyers with a much-needed sense of relief. While the statistics indicate only the beginnings of a positive trend in housing, the next several months should confirm whether or not we can celebrate over the long-awaited recovery in the housing market.
According to the National Association of Home Builders and First American Improving Markets Index for June 2012, The list of United States housing markets showing dramatic improvement includes 80 metropolitan areas. The May market hit 100 metropolitan areas, so there has been a slight decline, but 28 new entrants and at least one representative from 31 different states have joined the list this month. This should be considered a triumph. Some of the new entrants for June include Tuscaloosa in Alabama, Grand Junction in Colorado, Fargo in North Dakota, Knoxville in Tennessee, and Dallas, Texas. The variety of new entrants helped the list to become more geographically diverse, suggesting that the areas represented are improving not only in the housing market, but also the job market front and general economy. Meanwhile, the entrants from May that were dropped from the list have been exposed as being more fragile geographic zones for economic progress.
Optimism for builders
The National Association of Home Builders states that each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue. Thus, new homes directly impact the economy in a positive way. The builders’ group compiles a monthly index that showed that builder morale was at its highest level in five years last month, mainly because people are starting to buy homes again, which causes builders to become more confident and forward-thinking. Potential buyers are starting to peruse the market again, in increasingly higher numbers. The improvement in unemployment rates have also helped more Americans to be able to afford housing.
Home sales are also soaring because mortgages have become so cheap. According to Freddie Mac, a mortgage buyer, the average rate on the 30-year loan dropped to 3.67% this month, which is the lowest it’s been since the 1950s when long-term mortgages were first initiated. People can also take advantage of this drop by refinancing at lower rates, allowing them to pay less interest on their loans. When they have more money to spend as a result of reduced interest, the economy is boosted even further. The mortgage rates have been dropping as a result of the yield on the 10-year Treasury note. The yield plummets as the Treasury demand increases, and investors have been buying more treasury securities because they are less risky investments.
In April 2012, home sales grew for mainly previously owned homes, indicating that the market is indeed stabilizing. The National Association of Realtors noted a 3.4% increase in home sales, amounting to a 4.62 million annual rate. Pre-owned properties are being snatched up by investors. Conversely, the amount of default, auction and seizure notices sent to homeowners dropped 14%, showing that people are better able to hold onto their homes with improved financial situations. Investors may find that the most lucrative investment they can manage with a home may come from remodeling homes in disrepair, increasing property value. According to a recent report by the Remodeling Futures Program at Harvard University, home remodeling should be increasing this year.
Housing helping the stock market
According to an article by the Associated Press, The Dow Jones industrial average was up 101 points within the first hour of trading today due to jumps in housing. The spike in stocks can also be attributed to the notion that the Federal Reserve is devising ways to jumpstart the economy. Among some of the Dow’s biggest gainers were Microsoft, The Standard & Poor, and Nasdaq. With more single-family homes being built and permits being acquired to build, the market recovery is giving traders hope and confidence, thereby affecting stocks. Among homebuilder stocks, Pulte Group and Lennar were given a boost after positive reports on the housing market were released.
A study conducted by Robert Dietz, Ph.D. and Natalia Siniavskaia, Ph.D. of the Economics & Housing Policy sector of the National Association of Home Builders shows that, contrary to popular belief, houses in the suburbs do not provide more space for the occupants than housing in the city. Either way, space tends to be suitable for the occupant because smaller families or couples without children tend to live in the city while larger families migrate to the suburbs. The median size of an owner-occupied home is 1,800 square feet nationwide. Square footage increases in homes as the number of family members increases.
With the housing market where it stands, it is time to consider buying over renting if you can afford it. In most cases, renting a home has become far less economical. If you calculate your mortgage, property taxes, and homeowners insurance for a prospective home and still come up with a number less than your current rent, it may be a good time to contribute to the positive housing statistics and buy a house. Of course, you should always consider whether or not you have a secure enough job, how likely it will be that you move in the near future, and whether or not you plan on getting married or making any other major life changes, all of which could impact your timeline for buying a house. You also need to have a practically spotless credit score. Yet, with the attractive mortgage rates and these factors considered, you should be able to deduce whether or not you can settle down.
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