WASHINGTON (Reuters) - The U.S. economy grew in the third quarter for the first time in more than a year as government stimulus helped lift consumer spending and home building, fueling an unexpectedly strong advance. Read more
NAHB Lobbies to Extend Tax Credit
The National Association of Home Builders have heard from their members that the housing tax credit for first time home buyers has been driving sales, and recent economists’ observations have shown the truth – the tax credit is working. People are buying homes. But with the credit about to expire in November and the housing market still struggling, the NAHB wants Congress to extend the credit to November 2010. Doing so could fuel 80,000 more starts in the coming year. The NAHB also wants to expand the availability to all purchasers of a primary residence rather than just first time buyers. There is a downside – without a looming deadline people are more likely to postpone decisions. Also some builders have put up spec homes in order to capitalize on late coming buyers as we near the deadline. Those builders may have to carry those homes longer than expected if the deadline is moved out.
Source: Builderonline.com
10 Top Metro Areas for Boom or Bust
US News put together a pair of stories calling out the best and worst cities as far as the real estate market. The story hedges toward commercial properties but as the troubles of the past year has emphasized, it is important to follow the jobs and businesses when we talk about housing.
10 Areas Ready for Recovery:
- Tulsa, OK
- Pittsburgh, PA
- Long Island, NY
- District of Columbia
- Philadelphia, PA
- Birmingham, AL
- Louisville, KY
- Portland, OR
- Raleigh-Durham, NC
- Fairfield County, CT
10 Areas Destined to Bust:
- Las Vegas, NV
- Baltimore, MD
- Detroit, MI
- San Bernardino, CA
- Hartford, CT
- Dayton, OH
- Ney York, NY
- Charleston, SC
- Tacoma, WA
- New Haven, CT
Source: US News & World Report
Chicago Market Up in 2nd Qtr
The Illinois Association of Realtors announced Tuesday that home sales were up 67% in the 2nd quarter versus the 1st quarter of 2009. The year over year numbers are still down versus 2008 however. Also a good sign is the fact that home prices actually increased 7% as well. When higher sales are driven by weakness in pricing you can argue that there is still uncertainty in the market, but if pricing and numbers are going up, that signifies true demand. Source: Chicago Tribune
Housing Poised to Recover in 2010
According to Jim Haughey of Reed Construction Data the federal stimulus package is starting to work and we should see a return to growth during 2010. Spending on single family residential housing is forecast to grow 10% next year, with 528,000 units expected versus a predicted 375,000 for 2009. The fact that there are conflicting signals between consumer confidence (bad) and the housing numbers (good) indicated that there is a chance for the market to make a turn upward. Source: Builderonline.com
Spec Homes Needed for Tax Incentive
One of the side benefits of the $8,000 federal tax incentive for home buyers that it is driving the housing market by prompting builders to put up spec homes. It seems almost counter intuitive that people wouldn’t just buy up the current inventory. However the tax incentive requires that people close on their homes by Dec. 1st. If the buyer cannot find a home by then, the potential buyers lose out. From a builders’ standpoint, they have to have something ready to sell when that buyer walks in. It won’t do any good to sign a contract in November for a house that won’t start construction until April. So in response, some builders are ‘stocking up’ by building spec homes. The bad news is that this push will probably fade by the end of October. Source: http://www.bigbuilderonline.com/industry-news.asp?sectionID=363&articleID=1031517
Housing Impact on Economy
I read this good article on how the housing market is having an impact on the economy overall. In short, when housing isn’t doing well it has a HUGE impact on the overall production numbers. The author cites decreased inventory and increased sales as being positive but that the jobs market is still driving foreclosure levels to remain high. Sure, we have heard that from several sources lately but it serves to stress that the economy is a much larger machine than just the housing sector. We have to get jobs, banks, the auto industry, AND housing all back on track.
Spending on Construction Up
Construction spending was up 0.3% in June compared to estimates of a 0.5% drop. Although the spending is still down versus 2008 by 10.2%, the data comes as another indication that the economy may be bottoming out. The spending was assisted by public spending and federal government spending, as well as private residential. The economy overall still shrank 1% during the first quarter, but far less than the 6.4% from a year ago. Read: Associated Press
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