As the United States continues to climb out of recession it appears the real estate market is beginning to pick up steam once again. For the first time since 2006, home values have shown an increase. Although some are reluctant to admit a complete market recovery, statistically the American real estate economy is showing better numbers all across the board. The U.S. Census Bureau reported that new home sales have increased to 377,000 per year which is a 4.4% increase since this time last year and 15% from the year before. The market as a whole is showing signs of improvement such as home values rising and increasing new home construction.
A combination of low mortgage rates, less unemployment and a drop in the number of foreclosures means that there are less homes available on the market and more buyers are interested. Any economist will tell you that more demand for less supply will result in increased prices for the industry as a whole. That’s exactly what’s happening now for the real estate market in the United States. This increase in demand has lifted the median price of a new home sold to $246,200 which is a 14.9% increase from November of last year (money.cnn.com).
"The tide has changed," said Ivy Zelman, chief executive of research firm Zelman & Associates. "People feel it's ok to go back into residential real estate—it's no longer taboo—and that change in sentiment could have a very powerful effect."
This increase in demand has also increased the pace of new home construction. The Idaho Statesman reported that new construction is nearly 22% higher than it was from this time last year. New home builders are on track to start work on the most homes in four years. According to a survey by the National Association of Home Builders/Wells Fargo, builder confidence has increased for the seventh straight month to the highest level in more than 6 years.
One of the front runner cities in the economic recovery is Boise, Idaho. Brookings.edu ranked the Boise metro area 2nd in the nation for increased home values since 2011. The Brookings institution also takes into account employment rates and GDP for metro areas across the U.S. to rank them in complete economic recovery. Boise is currently ranked 5th in the nation for the most improved economy.
The housing market is still fragile and faces adversity in the future as the economy continues to improve. Mortgage lenders are still maintaining strict financing standards and thoroughly scrutinize a borrowers credit and income history before they consider lending. This attention to detail shields the lender from foreclosure and having to resort to short sales which was considered to be the initial cause of the economic recession. If lenders maintain these standards it will continue to drive the real estate economy further out of recession.