Though housing prices in the U.S. aren’t yet back to healthy numbers, it’s looking like the housing slump is finally on the way out. Find out why this is true despite the fact that further declines are expected.
Still headed for rock-bottom
It’s estimated that housing prices in the United States may yet fall another 14% before they plateau. These persistent declines in pricing are still being led by once sizzling housing markets in places like Orange County, California and across New York State. But despite the looming dips in prices, the bottom is getting closer.
From rock-bottom to straight up
Despite the looming decline, it’s anticipated that housing prices will end 2009 on a positive note. In the last quarter of 2009, residential investments are widely expected to add to economic growth for the first time in a whopping four years. This means the housing market will be at last contributing to positive GDP growth.
An explanation for the healthy housing market
Many analysts attribute the steady boost in housing market numbers to the First Time Homebuyers’ Tax Credit, part of government legislation to give the economy a boost. The tax credit gives first time homebuyers $8,000 in money back, provided they purchase a home before November 30, 2009.
On top of the boost provided by the tax credit program, modifications to loan programs have helped boost market inventory. This effectively creates more opportunity for those looking to buy homes.
The ripple effect of current stimulus programs
Experts hope incentives like the tax credit and loan programs continue into the New Year, ensuring continued growth for the housing market.
It’s predicted that by simply extending the First Time Homebuyers’ Tax Credit, over 380,000 new homes will be purchased in 2010. This would help to pare down the expansive housing inventory and would likely create thousands of new jobs.
Differences loom within the housing market
It must be made clear that several differences remain when it comes to the outlook on specific types of homes within the housing market.
For example, the market for single family homes hit rock-bottom in January but has already shown signs of improvement. In contrast, the market for multi-family homes is back in recession.
On top of that, the markets for apartments and commercial housing still aren’t doing well. This seems to be where most of the credit problems lie. That is, players in this market continue to have trouble landing credit and refinancing existing loans.
Positive growth is expected for pockets of the housing market
Though the market for apartments has ground to a halt, there is still a sunny outlook for the building side of both single and multi-family homes. Construction should be significantly ramped up by 2011, even though a complete recovery to former market patterns will take at least two more years.
Recovery is sweetened by significance
The recent housing bust has certainly been the worst one in most peoples’ memories. Statistically, it’s the worst downturn that market has seen in over 60 years. Paired with the recession, it’s not likely to be soon forgotten by U.S. citizens.
Interestingly, the housing market bust and accompanying recession came when American consumer debt was at an all-time high while savings was at an all-time low. It can only be hoped then that the general public heeds the recent lessons in economics and undergoes a major shift in attitude toward money.
If that happens, the housing market will have a more solid foundation than ever before, effectively granting 2010 yet another boost. If that happens, it’ll not only mean the housing market is out of a rut but that it’s headed for steady green pastures, thanks to hard-earned lessons by consumers.
