Housing Emerges as Economic Bright Spot

Here's some news remodelers and builders may have never expected to see again. From today's Washington Post:

"The nation’s housing market is surging again after years of historic declines, and the unique forces powering its return could last well into 2013.

"The number of homes for sale is at its lowest level since before the recession, sparking competition among buyers that has led to 10 straight months of price increases. The volume of activity is the highest since 2007.

"Builders broke ground in December on the most new housing developments in four years. And interest rates on mortgages are expected to remain near all-time lows through much of the year, galvanizing once-skeptical buyers.

"Together, those factors have helped the beleaguered housing market regain its footing and emerge as one of the economy’s bright spots this year.

"...The return of real estate marks a key milestone in the country’s economic recovery — and not only because it was at the root of the collapse. A healthy housing sector could boost gross domestic product by more than $400 billion, based on housing’s historical portion of the overall economy. It is also a major source of new jobs in construction and indirectly supports industries as varied as retail and local government."

Amen to that.



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Housing Starts to Soar, "Improving" List Grows

From yesterday's housing news:

Housing starts projected to soar

For the past few years remodelers have had an easier sell in at least one capacity: Convincing homeowners to make the most of their existing homes instead of buying new homes. Not only did builders nearly halt construction after the housing bust, but the cost-benefit analysis of remodeling vs. moving shifted in favor of remodeling, as more and more buyers of new homes found themselves holding mortgages far exceeding their homes' plummeting values.

Well, new construction is coming back this year, according to Calculated Risk's Bill McBride:

"No one should expect an increase to 2005 levels, however demographics and household formation suggest [housing] starts will return to close to the 1.5 million per year average from 1959 through 2000. That means starts will come close to doubling over the next few years from the 2012 level." -- more at Calculated Risk

The chart below shows how housing starts plummeted after 2005, and have only recently begun creeping upward again.

On the bright side, if the next surge in new construction replicates some of the quality issues of recent building booms, remodelers will have plenty to do in terms of repairs and reconstruction.

Also in yesterday's housing news...

"Improving" housing markets rise for fifth consecutive month

Housing markets are on the mend in 242 metro areas around the U.S., according to yesterday's report from NAHB's "Improving Markets Index." Launched in September of 2011 to debunk perceptions that all housing was in the toilet, the index is at its highest point since then. From NAHB chairman Barry Rutenberg:

"The story is no longer about exceptions to the rule, but about the gorwing breadth of the housing recovery even as overly strict mortgage requirements hold back the pace of improvement."

New metros on the list are geographically diverse and include Los Angeles, Des Moines, Nashville, Richmond and Cleveland.

More at NAHB.

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Housing on the Comeback Trail (So They Say)

Remodeling has been the little housing engine that never konked out entirely, even during the darkest days of the recession. And now, supported by stocks closing Friday at their highest level in five years, remodeling and new construction alike are expected to get even stronger in 2013, a number of sources have written.

At Bloomberg, there's this from John Gittelsohn:

"U.S. home sales and prices are poised to rise in 2013, solidifying a recovery that began last year after a  half-decade slump that was the deepest since the Great Depression.... Record-low mortgage rates and attractive prices, supported by declining unemployment, are luring buyers as the inventory of distressed homes shrinks. Homebuilders are responding by adding supply, bolstering economic growth."

More at "Housing a Sweet Spot for U.S. Economy as Recovery Expands" 

At The Washington Post, Moody's Analytics' Mark Zandi published this on Saturday:

"A housing renaissance has begun. This may be hard to believe after the dizzying, six-year-long crash in home sales, construction and house prices. But housing turned the corner last year, and it will take off in 2013....

"Buying a home wouldn't make much sense if house prices were likely to decline further; no one wants to catch a falling knife. But it seems increasingly likely that prices will rise. No one should expect the value of their house to appreciate quickly -- counting on your home to be a significant part of your retirement saving isn't a winning strategy -- but it is reasonable to expect that prices generally will rise with at least the rate of inflation for some time to come."

More at "Housing's renaissance could lead an economic recovery" 

At Time, Christopher Matthews wrote this about "the great housing rebound of 2012": 

"There’s no doubt that we’re finally seeing the beginnings of what economists call a positive feedback loop when it comes to housing. Rising home prices allow lenders to be more generous with home financing, which allows even more prospective home buyers to access the market, further driving up home prices. And higher home values give consumers and builders more confidence to go out and spend money or make investments, which also stimulates the real estate market and broader economy."

More at "The Great Housing Rebound of 2012: How the Fed Helped Sellers Beat the Odds" 

What do you think, remodelers? Is housing on the comeback trail? Is your business?

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