The Good:

Home sales have continued to increase slowly but surely in 2011. Existing home sales were up to 5.3 million this year which is nearly a 10% increase from where they were last year (4.9 million). Economists and forecasters expect this trend to continue, but at a sluggish pace. There has also been an increase in the amount of potential buyers than we’ve seen in recent history. Twice as many renters had the financial capability to buy a home than existed in 2005, a sign that the recovery has created a new pool of housing consumers that can help boost the real estate market.

Housing starts are also up. This year there have been 603,000 as of compared to last year’s 595,000. There has also been an increase in the amount of cash sales which may indicate that investors are looking for real estate to rebound in the coming years. With unemployment projected to drop slightly into the mid 8 percent territory, many optimists hope that improving economic conditions can help to stage a larger rally for the housing market in 2012.

The Bad

While housing activity has risen slightly from last year, it is still under performing by historical standard. Mortgage rates remain very low as the Fed continues to entice buyers to take advantage of affordable rates in a weak economy. Some have suggested that the issue is not in the terms or rates, but with the lenders themselves. Banks, hampered by increased regulatory standards and less-than-satisfactory earnings on the year have been reluctant to loosen the tight credit standards that have been the cause of much of the country’s economic stagnation. Many experts have suggested that a significant boost in lending could increase home sales anywhere from 15 to 20 percent! This would create a tremendous amount of momentum for a housing market that has struggled to regain its footing since the housing bubble crash three years ago. While new home sales have hit a record-low 320,000 this year many expect that number to increase dramatically by 2012. Let’s hope that they are right.

This is filed under National Markets.


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