Modest Housing Rebound Seen in 2012
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- Kara Johnson | January 19, 2012
The housing market will begin to rebound in 2012, as part of a broader economic recovery, the financial and business analytics firm CoreLogic is predicting.
The company says it is “bullish” on prospects for a modest improvement in the housing market and the overall economy in 2012, based on a number of positive trends in 2011. While acknowledging there is still a lot of uncertainty, it notes that the U.S. economy successfully weathered several blows in 2011 and expects it will likely continue to be able to avoid stagnation in 2012.
2011 trends pointing in favorable direction
Among the positive trends, it notes that households are paying off debt and having an easier time obtaining credit. In a particularly surprising development, Home Equity Lines of Credit increased for the first time since the financial crisis began, doing so during the third quarter of the year.
Other encouraging developments in the housing market include rising construction starts and building permits for single-family homes, which increased at an annualized rate of 15 percent during the second half of the year, and a rising trend in existing home sales, which were 12 percent higher in November than at the beginning of 2011.
Historic cycles suggest upturn due
CoreLogic notes that the housing industry tends to have long business cycles, with regional downturns typically lasting three to five years. It notes that homes have been getting more affordable due to falling prices and record low mortgage rates, suggesting the market is due for an upturn.
“The time is right in 2012 for prices to begin growing again and housing affordability will put a floor under any further significant declines in 2012,” the report reads. “The spring and summer buying season in 2012 will be watched very closely for positive signs of demand.”
Other positive signs include a gradual improvement in employment figures, and rising consumer sentiment, even though both measures remain low by historic levels.
On the downside, the report notes several possible impediments to a recovery including 2012, including the European debt crisis and a general slowdown in the world economy, but does not expect these to be more serious than the bumps the economy hit last year, including several natural disasters, the U.S. debt ceiling fiasco and the earlier stages of the European debt crisis.
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