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Total Recovery for Real Estate Not To Be Established Before 2015

Posted on Tuesday, January 13th, 2015 at 1:09 am    

The good news is that the real estate market has been able to find its way back from the edge, almost one-third of the path into a pre-bubbled, normal market. But the bad or sad news is that it will take a whole year to complete the journey. Also, this process of recovery may take longer time if economy falls down again.

The Housing Barometer:

The new housing barometer of real estate website, Trulia, shows that the industry is just beginning to recover from the hard blows it received at the time of recession. The Chief Economist of this website, Jed Kolko, observed the existing home sales, rate of foreclosures and delinquencies as well as construction starts, and then combined all these indicators to prepare the barometer. According to Kolko, homebuilder confidence is indicated in a proper way through housing starts , while the foreclosure rate and the number of sales illustrate the consumers’ confidence level and financial stability.

Achieving Full Recovery:

This barometer also shows that our nation is 34% higher than the market trough when measured on these metrics, in comparison to 16% measured a year ago. So, we can be sure that the direction of the movement is most definitely the right one, but in case the pace of recovery is the same as now, 100% recovery cannot be achieved until 2015’s end.

The ‘New Normal’:

Kolko also says that the ‘new normal’, on arrival, may not share the same appearance as the market prior to the bubble followed by the crash. For example, Kolko says that ‘the homeownership rate probably won’t go all the way back up to what it was before the bubble and that’s both because of people being more risk averse about homeownership and it’s also demographic’. More number of baby boomers who are downsizing their accommodations might rent rather than buy.

Kolko opines that if the recovery of the economy is quicker, then that would accelerate the recovery pace for real estate industry and raise the housing demand. In contrast, in case of any other factors driving U.S. back into a state of recession such as crisis in Europe, the estimate doe 2015 may become overly optimistic.

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