2012 looks like it may be the housing market bottom. Economists and industry insiders are saying the traditional spring home buying season is benefiting from increased sales of homes as well as pending sales. The two indices offering this hope are the Pending Home Sales Index whose February numbers came in 9.2% higher than last year and the Existing Home Sales which improved by 8.8%.
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Increased demand is softening competition for sellers and indicates the long-anticipated housing recovery may be at hand. Mild winter weather helped builders in new home construction.
The National Association of Realtors (NAR) is looking for sales increases of 7% to 10% for this year. These are the highest expected increases in five years. Since consumers have retired a good bit of their debt and have decreased savings rates, owning a home has once again become a viable option. Interest rates are still at historic lows although big banks are still reluctant to make loans so many home sales have been in cash.
Buyers with ready cash
have squeezed out many first-time home owners, although smaller banks have loosened their restrictions somewhat, making financing a home easier. The high foreclosure rate particularly makes paying cash attractive since buyers can sometimes get a better deal for cash on properties whose values are under water. As these homes get snapped up, they strengthen the market and make it more attractive for other buyers to come in.