Five years after the bubble burst there have been many articles written and news commentators questioning if Americans, the government and financial institutions have learned any lessons from the Great Recession. They ask where we are on the recovery curve.
As a real estate broker I can offer a few observations from “my corner of the world” plus some of the latest industry data.
1. The real estate market generally is in full recovery with sales up, prices up and tight inventories of homes for sale beginning to adjust to a more balanced position. Locally for Queens/Long Island closed sales activity is up 15.5% over last year at this time. Median home prices are up 6.4% over last year. Available residential inventory is off 17.6% (lower) from last year at this time. (per Long Island Board of Realtors MLSLI August 2013).
2. We are not watching the formation of a new housing bubble. Today’s rising home prices have been more the result of a shortage of homes for sale and not the loose lending decisions, lack of guidelines and general “irrational exuberance” prevalent in the 2002-2006 time period preceding the crash. The shortage of homes for sale has resulted in multiple bidding on homes and what naturally follows – rising prices.
As more homeowners feel confident in the market and rising prices help improve their equity position so they can make a move, the inventory challenge will correct itself – which is beginning to happen. 3.2 million homeowners were freed from negative equity positions in the past year and an additional 1.9 million are expected to do so in the coming year. (Zillow 8/29/2013 Report)
RisMedia reported 9/18/13 that Realtor.com’s National Housing Trend Report for August 2013 points to “a healthy shift in the dynamics of the housing market where future home value appreciation will likely be driven by market demand rather than inventory shortages” – a market moving toward normalcy.
In the most recent Home Price Expectation Survey leading analysts feel home values will increase approximately 5% over the next 12 months – a more sustainable appreciation than that many locales have experienced over the past 2 years.
3. People still want to buy homes and homeownership is very much alive! NAR’s 2013 Housing Pulse Survey found:
- 8 in 10 Americans believe buying a home is a good financial decision.
- 68% of those surveyed felt now is a good time to buy a home.
- 50% of renters said eventually owning a home was one of their highest personal priorities.
Five years after the crash Americans still know the importance of homeownership – and There Is No Place Like Home!