Home Building Increases Signal Economy Recovery

Great news! Home building is on the rebound at last. In almost every time of economic recovery, the housing market has led the country’s economy out of recession and into recovery, except for the most recent time. That is why it is good news for not just builders and those who work in construction, but also for the economy as a whole, because it signals that the economy may be on an upward swing after several years of upheaval and decrease.

Hope Is Increasing In the Home Building Market

Normally, a little over 1.5 million homes are begun each year. This includes single-family homes, as well as apartment units. When the housing market was at its peak, this number was at more than 2 million to try to keep up with the demand. The last few years, however, an average of less than 600,000 homes were started and, in 2013, the number increased to 900,000. This year, that number is expected to climb to over 1 million, which is a sign of hope in the real estate and construction world.

Even though we are beginning to see good news, it will take a while before it will get back up to the normal range. The housing market collapse was immense, and its effect upon the economy was immense as well. While ups and downs are a normal part of the economic cycle, this event contributed to the entire collapse of the financial market and affected not only our economy, but also economies all over the world. The key is to gradually begin building more homes until you are sure that the demand is there.

Housing Market Recovery Will Be Slow

The recovery from this collapse has already taken five years and it will most likely take several more. Even though the rate of housing construction grew in 2012 and 2013 at double-digit rates, this was largely due to the fact that the numbers were at a very low level to begin with. Recovery seems to be on its way, which is the good news. We are on a course to see great growth in the next two years, due to:

·         Demand from young adults beginning home ownership & from existing homeowners

·         Job growth increases

·         Net worth replenishment, due to increase in home values and revival of stock market

·         Government economic situation more stable

While this is all good news, it is important to note that we are just at the beginning of the upswing. However, it is better to be in the midst of it going up, than at the bottom, which is where most homebuilders were just a few years ago. It may be time to amp up your marketing efforts to connect with more clients who may be thinking about building a home in the near future.

With home construction numbers on the rise, it is important to rethink how you are reaching clients and make plans to reach even more. With the younger adults entering the workforce and beginning families, and existing homeowners beginning to feel better about building, you have the opportunity to grab your ride on the upswing and reach the peak in great condition.

 

U.S. Cities without Affordable Homes

The scene is getting tougher for home buyers with more complex home loan procedures and prices moving upwards.  

According to a recent study, for middle-income families, purchasing middle-priced homes is affordable in only 8 out of the country’s 25 biggest metropolitan areas.

Here are the top 5 cities where buying a home is not an affordable option anymore for most people:

Baltimore

This city has become 16% more unaffordable than the previous year. Buyers prefer Baltimore because of its proximity to Washington D.C. Last year there was a fall in the median sales price of homes in the metro area which led to a surge in demand and a spike in prices. Buyers were planning to stay put in homes long term and didn’t mind paying extra. In many cases, buyers were willing to up their offers if sellers received better offers.

Phoenix

The affordability of homes here has come down as compared to last year. The housing meltdown is warming up again. In Phoenix, many buyers are investors intending to rent out homes. This is bringing down inventories and increasing prices. Institutional investors such as private equity firms and hedge funds are causing prices to increase by purchasing many properties and refusing to resell them.

This trend has led to an increase in values of existing homes. Homeowners are waiting for their home values to go up further before deciding whether or not to sell their homes.

Los Angeles

Homes in L.A. are 17% less affordable as compared to last year. In the county area, the median sales price this year has been considerably higher than last year. This is because investors have been making a large number of purchases and many young adults have entered the region due to a growing tech industry. Bidding wars among buyers have almost become the norm. Some buyers are removing offer contingencies in an attempt to get past other offers.

Sacramento

Homes here are 19% less affordable against last year’s figures. Sacramento is witnessing rising prices due to a spillover effect. With prices in the bay area of San Francisco continually rising, many buyers are unable to afford real estate there. Instead, they’re looking east towards the Central Valley which is more affordable. There’s been a significant spike in luxury real estate prices during the third quarter in the Sacramento metro area as a result of increased demand and reduced inventory.

In the first part of this year, almost all homes in the market were sold within a week. In a healthy market, there’s usually about six months inventory for sale. Sacramento saw listings of just under a month which pushed prices upwards.

Detroit

Detroit has become 28% percent more unaffordable than last year. Though Detroit had a bankruptcy filing in July, real estate prices have picked up and are getting out of reach for many buyers. July saw a spike of 17% in home prices in the Detroit metro area as compared to this month a year ago.

Most of the price increase can be attributed to many car manufacturers getting back into business. This has helped in boosting consumer confidence and more buyers are entering the market. Many other large companies have also moved their offices out of the suburbs into downtown Detroit. This has boosted real estate demand and brought down supply.