I recently wrote that home builders are slacking by not delivering enough product thus keep inventories low and prices out of range for most buyers. However, after a decade since the housing bust began, we are finally seeing signs of improvement in the housing market.
There are some fundamental reasons why:
Off to Work We Go!
The US Labor Department reports that there are 2.8 million more people working than this month last year. Millennials alone added 421,000 jobs in the January jobs report.
More jobs equal more income.
More income equals more buying power.
Building Nests
According to a recent study by Goldman Sachs, for the first time since 2006, newly formed households eclipsed the 1 million mark . That same study projects household growth approximating 1.2 million annually for the next four years.
Times are Good
Better finances, low interest rates, and greater willingness among banks may entice more households currently renting to buy and more homeowners to trade up. The Mortgage Bankers Association reports that mortgage applications for purchasing a home was up 24% from a year earlier.
Full-fledged recovery for housing is still a while away given that we are still only at 70% of peak pricing. However, after a long time of near dormancy in many parts of the country, it looks like it is starting to stir.