It is true! The housing market is making its comeback. Last week we reported sales of existing homes rose 3 consecutive months and that new home sales were up in June over 3%. Well, guess what? New home sales were up 11% in July! This is more great news for us to “build” upon moving into the dog days of summer.
What is the reason for this growth? There are several factors in my opinion: low rates, the right price point, multiple offers on existing homes, the tax credit and the market conditions. As we all know, rates have been low for an extended period of time and according to Ben Bernanke in his economic update, they are going to remain low as a strategy to aid in our economy’s recovery. Builders, banks and home owners alike have been reducing prices to encourage offers – well, it appears that the sale of the century for housing has worked and buyers are coming out of the woodwork. As these buyers are making offers on resale properties and losing out to other buyers, the frustration has lead them to new homes – no multiple offers on to be builts! As the tax credit has aided in getting first time buyers off the fence, it has also spurred activity in the move up market which is resulting in the increase in new home sales as well. And lastly, the market has been decreasing for over 4 years – June or July of 2005 is when we earmarked the down turn in housing. Additionally, as we all know, what goes up must come down and vice versa so it was about time for the market to change. You can’t keep a good thing down.
The housing recovery is critical in so many ways to the general economy’s recovery – let’s keep the momentum moving in a positive direction by spreading the word. Get it? Got it? Good!