Aside from artificial governmental inducements like tax credits, rebates and mortgage bail-outs, the raw underlying fundamentals of housing economics actually remain quite strong. For those seeking housing for old fashioned reasons and long term investment, home buying today appears to still be an incredible opportunity.
Will home prices continue to fall? According to the Fiserv Case-Shiller Indexes the bottom is near and by early 2014 Seattle area home prices will have climbed about 25.5% percent from 2010 levels. Bremerton – Silverdale is expected to grow at 44.7% and is considered the number one strongest housing market in the country for the time period.(2)
Experts say that nationally we need to add 1,300,000 new housing units each year just to keep up with population growth. In 2009, builders built approximately 550,000 single family homes. According to forecasts.org the pace of building for 2010 has been steady at an annualized rate of 546,000 through August. They expect the rate will remain similar throughout the first part of 2011. This means that we have suffered a cumulative shortfall of home building of approximately 1,500,000 homes in just two years! Forecasters expect the shortfall to continue for at least the next year. A supply / demand ratio imbalance is forming.
New Privately Owned Housing Units Started. Thousand Units Annual Rate. (1)
Forecast.com also predicts that interest rates will continue at the current low 4 – 5% range through at least the first quarter of 2011. Housing affordability is good.
30 year Conventional Mortgage Interest Rate forecast (1)
Certainly, unemployment and other bad economic factors are a drag on the recovery but many economists still think we have seen the worst for the housing market. It’s good to remember that more than 90% of Americans have a job, America still manufactures more than any other country in the world. Never bet against the American economy.
(1) Charts and statistics courtesy of http://forecasts.org.
(2) Housing Markets That Will Be Strongest by 2014 By Venessa Wong, Bloomberg Businessweek
Aug 4, 2010 http://realestate.yahoo.com/promo/housing-markets-that-will-be-strongest-by-2014
