The Future Looks Bright

There’s still a great deal of uncertainty surrounding the housing industry and economic recovery in the United States. The future however, may not be as difficult to predict as everyone thinks. There is ample evidence that the future looks very bright for the housing industry and U.S. economy as a whole. As previously predicted, an improving housing industry is critical to economic recovery, and it’s likely we’re going to get that necessary boost in the next few months. We’ve outlined a scenario that is likely to occur in chronological order, beginning this summer.

1. Existing home inventory levels drop sharply. – This is already happening. As inventory levels continue to drop, this creates a seller’s market in most price points.
2. Real estate prices recover, leaving fewer homeowners underwater with their mortgages. – Prices rose by double-digits last year, and are expected to continue to rise for the next several years.
3. New construction activity rises, replacing most of the 2.5 million construction jobs that were lost during the recession.
4. Unemployment levels drop to below 6%, signaling a return to pre-recession levels.
5. The economy improves as construction activity stimulates even more new jobs in secondary industries that rely on real estate such as home improvement, home furnishings and other related sectors.
6. New household formation stimulated through strong employment opportunities creates an even greater demand for existing and new homes. The growth begins to feed on itself.
7. The Fed reduces its bond buying activity until Quantitative Easing ceases to exist, leading to inflation and rising mortgage interest rates.
8. Inflationary pressure and rising interest rates offset some of the gains in economic growth.
9. Instead of seeing an economic boom, we’re more likely to experience steady and stable growth for years to come.

People thinking about buying or selling real estate should consider each of the factors above before making a decision. Remember, the best decisions come from the best information.