Atlanta Real Estate Blog

US Housing Market Improving

The end of the meltdown may be in sight, but the long road to recovery will likely be a long one.  The last 24 months have been a rough ride for the US housing market.  Thankfully, federal regulation and fiscal policy have been effective in easing the impact of the great recession.  Many experts are citing encouraging signs that are driven by the summer seasonality of the housing market and which may also point to stability.   Some of those encouraging signs are:

• Existing home sales have increased for the fifth consecutive month.

• Home prices are rising, an all-important indicator of stability.  Rising home prices translate to a more balanced supply and demand picture.

• By all indications, the market still represents opportunity.  The $8,000 first-time buyer tax credit and Georgia Statewide $1,800 credit expire at the end of November, provide a powerful incentive to buy now.  The Georgia Dream program, with $14,000 in down payment and repair assistance is helping buyers afford to buy homes.

• First-time buyers are active and more repeat buyers are also taking advantage of favorable mortgage rates and better prices.   These two broad groups of buyers are absorbing excess inventory.

• Mortgage rates, which now sit between 5.0 - 5.5% range, are slightly above the record low of 4.78%.  Rates are still very favorable and represent a historic opportunity for qualified potential buyers.

• Housing affordability remains very strong, as prices have adjusted to levels not seen since the mid-2000s.

• The U.S. economy looks a bit brighter as GDP figures came in better than expected for the second quarter.  The economy declined at a pace of just 1% over the past quarter, a great improvement from the first quarter’s decline of 6.4%.   Economists point to this as a  potentially strong signal that the longest recession since World War II is finally beginning to wind down.  Looking forward, the GDP is expected to return to positive territory in the third quarter and increase further in the fourth quarter. 

• The U.S. stock market has recovered 50% since its March 2009 low.

• American consumers are increasing real savings.  Last month alone, the U.S. savings rate hit 4.6%, a marked change from the negative to 0% savings rate for the entire decade.   Economists consider a savings rate of 5% beneficial for the long-term viability of the economy and housing market.   With increased savings, lower consumer spending could result in a slower recovery, but might lay the foundation for sustainable growth in the future.  With limited prospects of new job growth, unemployment will continue to remain in focus as the best indicator of broader recovery.

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