Is the Housing Crisis Over?
July 12, 2012
It’s official: The housing market has reached bottom, at least according to 44 forecasters surveyed by The Wall Street Journal. Only three economists surveyed said they didn’t think the market had reached bottom yet.
The recent momentum in housing has plenty of economists and forecasters convinced that the worst is behind. According to many real estate indices, home prices are up, sales of existing and new homes are picking up year-over-year, and inventories of for-sale homes have fallen dramatically.
The decrease in for-sale inventory is the key and will likely help maintain the rise in home prices, Mark Fleming, CoreLogic chief economist, told The Wall Street Journal.
What’s more, the number of vacant homes is at its lowest point since 2006, The Wall Street Journal reports.
Now that the “bottom” has been reached, economists admit there’s still a long way to go for a full recovery. In particular, more than one in every four home owners with mortgages are still underwater, owing more on their loan than their home is currently worth. However, analysts note that rising home prices are chipping away at that number. Also, shadow inventory of unsold homes and foreclosures still threaten the momentum of the recovery as well.
“From here on, housing is unlikely to drag the U.S. economy down further,” JPMorgan Chase economists note. “It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses.”
Source: “Housing Passes a Milestone,” The Wall Street Journal (July 11, 2012)
Updated: July 14, 2020