Housing market is a glass half full and half empty
According to Trulia’s November Housing Barometer, which measures construction starts, existing home sales, and delinquencies plus foreclosures, reveals that the housing market is now relative to its worst point during the crash as well as its normal levels, as the company says housing is at 51 percent of normal. For each indicator, Trulia compares this month’s data to how bad the numbers got at their worst as well as their pre-bubble “normal” levels.
Trulia’s Chief Economist, Dr. Jed Kolko has long been conservative when forecasting the housing recovery, and this month notes that the slight improvement that has put housing over the 50 percent of normal mark is due to strong increases in sales of existing homes, slight improvements in foreclosure and delinquency levels, and although construction fell for the month, it remained at its highest level in four years.
“Hurricane Sandy reduced housing activity in the Northeast,” Dr. Kolko reports. “Construction starts in October and November showed smaller gains relative to previous months in the Northeast compared with the rest of the country. Sandy held back Northeast sales, too, but to a lesser extent.”
Averaging the three indicators together, the housing market overall is 51 percent of the way back to normal, compared with 28 percent in November 2011, a marked improvement in just 12 months. In June, Dr. Kolko projected that at the pace of recovery at that time, the housing market should be back to pre-recession normal by 2016, as should the turnaround rate for renters waiting to become homeowners.
“Does halfway back to normal mean the glass is half-full or half-empty?” Dr. Kolko asks. “The half-empty view is that our three housing measures hit bottom (on average) in 2009, so it’s taken the market a long time–three years–to get to the halfway mark. But the half-full view is that halfway back to normal is better than anyone –myself included–predicted for 2012 at the start of this year.”