5 Signs the Housing Market Is Back in Business

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It was the bursting bubble of the housing market (and the wildly complex and dubiously legal securities attached to it) that led us into the Great Recession; perhaps news coming out of the home buying/home building sector today is the sign that the recovery has finally occurred. Home values are rising in many major markets, which means two things: people are confident enough to make big purchases, and people will start making more purchases of all size and scope as they sense their net worth increasing. Now the only concern is that the market will “recover” too fast and reflate too much.

5 Building Permits Hit a High Last Month

October saw more building permits issued than any single month in more than half a decade. The last time the same volume of permits was witnessed was June of 2008, before the recession had fully taken hold. Analysts expected to see around 930,000 permits during October, but the data show an actual figure of more than 1,030,000 permits issued, a 6.2% increase over September, which itself had seen an increase over the prior month. Few things stimulate spending more than construction; thus, often one can safely assume that the more permits issued, the more robust the economy at large.

4 The Government Shutdown Slowed Some Sales

October home sales took a dip, with pending home sales (i.e. signed contracts) falling to their lowest level since December of 2012, according to the National Associate of Realtors. However, this slump was largely caused by the partial shutdown of the federal government that took place for much of that month: with the IRS not providing income verification and with tens of thousands of federal employees suddenly not receiving income, the October drop in sales was more of an artificial slowdown than an indication of a genuinely constricting market.

3 The Forecast for 2014 Looks Good

The National Association of Realtors (NAR) are forecasting a fine year for home sales in 2014. The NAR predicts as much as a 5.4% increase in the average price of a home during the coming year. If interest rates remain relatively low, that could mean more sales of pricier homes, injecting more cash into the economy as buyers shell out more when purchasing a home and owners sense their wealth—and therefore their spending power—increasing.

2 Home Prices in Dozens of Cities Are Rising Steeply

In at least 20 American cities, home prices are rising at rates not seen since early 2006, well before the collapse of the inflated housing market that led to a recession. The telling S&P/Case-Shiller Composite-20 index, which calculates property value based on a swath of data from 20 major cities (such as LA, Boston, NYC, Vegas, etc.) advanced more than 13% in the year-long period between September 2012 and September 2013.

1 Borrowers Are Starting to Miss Payments

An unavoidable attribute of the American housing market are borrowers involved with a loan they can’t pay back. Oddly, the fact that many borrowers are starting to skip payments on home equity lines of credit may actually be good for the housing market: the loans at issue today are largely those given out in the last decade, many of which are now reaching the time when the borrower must begin to pay down their loan’s principal, rather than merely paying the interest. Perhaps lingering troubles with loans from the pre-recession era will keep banks and borrowers from reentering a cycle of irresponsible lending that could lead to another bursting bubble.

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