New Housing Market Trends

For several years the housing market has seen ups and downs, but there are signs of recovery, albeit slow. Many people held fast to the idea that the strong economy would last forever; the lenders and underwriters also used less than scrupulous practices in lending. All of this made the housing bubble inevitable.

The bubble occurred first in 2001 when prices began increasing and continued on an upward increase up until the beginning of 2006. It was in 2006 that sales of homes began to decline and hit a low of 10.5 percent. As the sales declined, so did the overall home prices, but by this time the subprime loans were no longer lending to people they knew could not afford the mortgage.

In 2003, the market was booming and peaked in September of that same year. As the economy began to soften, which eventually would take a turn for the worse with many people losing their jobs, foreclosures were soon to follow. This chain reaction caused things to only get worse before they got better.

The economy was negatively affected by the rise in foreclosures and the lack of home sales. Many construction companies were no longer building new homes, which causes many to find themselves unemployed. The entire real estate market in the United States makes up 10 percent of the economy, which meant the country was in trouble at this point.

Because of no new homes being built and declining home sales, the economy walked into its first recession in many years, which would then be a long road to recovery. Unemployment rates were high at this time, but some parts of the country felt it more such as Detroit, Michigan, which had a very high unemployment rate due to lack of automobile sales. Moreover, it took those searching for jobs up to a year to secure new employment.

August of 2011 saw a spike in home sales, which was welcomed news for everyone. There was an 7.7 percent increase overall in August, but it seems that some states and areas of the country saw more of an increase while others saw less. The West saw a big spike of home sales with a 18.3 percent increase, but the Northwest saw an increase of only 2.7 percent.

While it is true that the recovery of the economy has been slower than most would like, and there are still many people who are jobless, signs of improvement have been felt because of the increases in the sales of homes. Moreover, since the subprime lending is no longer available, it has made qualifying for a new home more difficult. Many people had a hard time believing there was a real upward turn in the economy since the grim news played repeatedly on the news and in newspapers.

The future predictions for the housing market are promising. All indications insist that housing sales will increase even more in 2012. One key reason economists foresee a better sales outcome in 2012 is due to the fact that home values are rising, which is always a good sign that improvement is the market is imminent.

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