Several stars need to come into alignment for a full blown housing recovery. First there must be a meaningful jobs recovery to supply the market with demand. Second the inventory of foreclosed homes, and short sale properties needs to be absorbed to stabilize prices. Finally there needs to be a return to reasonable, yet prudent lending standards to make home loans available to worthy home buyers.
First quarter housing numbers are due out in a couple of weeks. From my perch in central Illinois it is difficult to tell the national trends, however here’s my stab at it; closed home sales up modestly, sales pending up more than ‘expected’, and home prices stable to down slightly depending upon region.
Looking at our first star that needs aligned, jobs. There is some improvement, weekly initial claims for unemployment insurance are running below 375,000 to the lowest levels since 2007. That typically translates into robust job creation. But not this year when the March jobs report indicated only 120,000 net jobs were created.
We all know the government’s perverted methodology to calculate the unemployment rate is intentionally misleading to help the politicians of both parties. One thing is for certain, if we would begin a legitimate recovery process the nearly 13 million out of work or the 12 million underemployed would love the opportunity to fill those jobs. In other words there’s no shortage of labor, maybe qualified labor, but the sheer numbers are available.
The bottom line on jobs is that we are making progress. At the current rate of job creation, calculating population growth, and new entrants into the jobs market we should reach a 6% rate by 2050. So hang in there home sellers, help is coming.
The second star; foreclosures and short sales. Realty Trac is reporting the fewest foreclosures in Q1, 2012 since 2007. Don’t break out the party hats. The robo-signing law suit settlement which froze the majority of foreclosures for a year created a two year backlog. By freezing the homes in the process of foreclosure from 2010 in the 2011 pipeline, those that normally would have been added to the pipeline had nowhere to go.
Reuters reports several sources as predicting there will be more foreclosed homes in 2012 than in the record year of 2010. That’s good news, holding these properties off the market only delays housing from hitting bottom.