Housing Recovery Makes Halfway Mark

Nationally, November 2012 was hump day for the housing market.

According to Trulia’s Monthly Housing Barometer, October and November 2012 saw 5% jumps and recovery jumped from 28% in November 2011 to 51% November 2012.

The three key housing market indicators Trulia’s Housing Barometer charts and their information source are: existing homes sales (National Association of Realtors or NAR), construction starts (U.S. Census Bureau) and the delinquency plus foreclosure rate (LPS First Look). They compare the current month’s data to how bad the numbers were at the bottom and to pre-bubble normal levels.

New construction starts were down in October and November, the delinquency plus foreclosure rate held steady and home sales increased strongly and carried the load for the 5% improvement. This was despite the fact Hurricane Sandy caused a 5% decline in construction starts and limited home sales gains to 3% in the Northeast part of the country, compared to 7% nationally.

While the National Housing Recovery outlook for 2013 is promising it also faces some potential resistance. The Mortgage Forgiveness Debt Relief Act of 2007, passed to help struggling homeowners avoid an IRS tax consequence when they negotiate a principal reduction on their existing mortgage, short sale their home, or participate in a foreclosure process, expired December 31st. Rep. Jim McDermott (D-Wash.) said, “The housing market is in its first stages of recovery, making now the worst time to take this exemption away from homeowners. If Congress does not act, the gains the housing market has made will be wiped away.”McDermott has proposed a bill to extend the exemption. I don’t believe McDermott is right about “ all gains being wiped away” but it certainly could hamper the recovery. As prognosticators say “the sky is falling” regarding the expiration of The Act it is unlikely Congress won’t extend or enact similar legislation.

Housing recovery has been slow but is gaining momentum. Hopefully, the trend continues. Housing normalcy is on the horizon. As of now we are over the hump.

 

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