(Published on - 6/23/2017 7:42:52 AM)
The article, Opinion: 9 signs the housing market will only get hotter in 2017, from Jeff Reeves at www.marketwatch.com, reports that since 2013, Jeff has been writing regular columns about how the housing market’s recovery isn’t just sustainable, but on a path to continued growth. And after looking at the past few months of data, he remains convinced the housing market has nowhere to go but up.
Here are nine of the latest reasons why:
Single-family home activity is climbing: When the Commerce Department recently reported home starts for April, a bright spot was the brisk activity for single-family home construction. The pace of 835,000 starts is a bullish sign for the housing market because builders are favoring homeownership via stand-alone units instead of multifamily homes for renters.
Housing starts are trending higher: While the overall April numbers may be soft on the surface, MarketWatch reporter Andrea Riquier recently pointed out that “starts have been 6% higher in the first four months of this year than in the same period last year, and the pace of permit authorizations is over 10% higher, pointing to stronger growth in the future.”
Existing-home sales are only capped by inventory: The National Association of Realtors reported a decline in existing-home sales from March to April, but the figure still was a 1.6% increase year over year. Besides, March existing home sales were at a 10-year high. The details show an absence of inventory is really the prime factor holding back sales from pushing to even higher levels, which means that it still is quite a seller’s market and home values have a firm floor under them.
Mortgage activity is strong: According to recent data from the Mortgage Bankers Association, purchase activity is up 3% year over year despite an increase in interest rates. While the longer-term trend for rates is higher, we are seeing a bit of relief right now as well-qualified borrowers start seeing rates of 4% or less —the lowest levels of 2017. That will only spark more activity in the coming months, fueling already high demand.
Unemployment is ultralow: Say what you want about meager U.S. economic growth, but the fact remains that the labor market is very tight and Americans are finding plenty of work. The headline unemployment rate fell to 4.4% in April as payrolls surged after a March lull. The details also were encouraging, with hourly pay up 2.5% year over year and hours worked slightly higher. A strong job market means more Americans with stable family budgets, and that ultimately results in a robust housing market.
Housing prices are climbing ever higher: At the end of April, the Case-Shiller home price index hit its fourth consecutive all-time high. On top of that, the 20-city index notched its fastest pace of growth since 2014. Thus far, the bears who have said home prices cannot continue higher from current records have been continually proven wrong — much like the bears who thought the stock market couldn’t continue moving higher in 2017.
Foreclosures are rare: Foreclosures are near a 10-year low as stricter lending standards and regulations have prevented banks from extending risky mortgages, and kept unqualified borrowers out of the market — as they should be. The lack of foreclosures is an undeniable sign of health for the housing market, and that these gains are sustainable going forward.
Builders are confident: After hitting its highest level in 12 years a few months back, builder confidence has held firm and shows no sign of retreat. Specifically, the National Association of Home Builders noted in its May reading — the second-highest on record — that even higher material costs can’t hold back the index, and readings for both future sales expectations and current conditions are particularly strong.
Most home prices aren’t at prior peaks: Of course, all these positive indicators may have some thinking about the irrational exuberance of 10 years ago and consider all the lofty data a sign that these gains cannot be sustained. However, a recent study from real-estate research firm Trulia reinforces the notion that while some markets may be a bit overinflated, others have much more room to run. Specifically, just 34.2% of homes nationwide have seen their value eclipse pre-crisis highs — meaning a small number of highfliers shouldn’t paint a picture of meteoric rises everywhere. Not only is the nationwide recovery still slowly taking shape, it is more sustainable now that consumers, builders and banks alike have learned their lesson.
Here is the link to the entire article: http://www.marketwatch.com/story/9-signs-the-housing-market-will-only-get-hotter-in-2017-2017-05-25