1 Reason the housing crisis in over!
The daily headlines keep coming fast and furiously in the financial and popular newspapers suggest that the housing crisis is intensifying. Yet it is very likely that April will mark the bottom of the U.S. housing market. Yes, the housing market is bottoming right now. Here in Maricopa County we have had 4 months of positive sales and are currently working on our 5th.
How can this be? To begin with, a bottom does not mean that prices are about to return to the heady days of 2005 at double digit appreciation. That probably won’t happen for another 15-20 years. It just means that the trends show it is no longer getting worse, which is the critical factor.
Most people forget that the current housing bust is nearly three years old. Home sales peaked in July 2005 for most of Maricopa County including Buckeye,Litchfield Park and Peoria.
New home sales are down currently a staggering 63% from peak levels of 1.4 million home sales. Housing starts have fallen more than 50%, and, adjusted for population growth, are back to the levels of 1982.
Furthermore, residential construction is close to 15-year lows at 3.8% of GDP; by the fourth quarter of this year, it will probably hit the lowest levels ever in history. So what’s going to stop the housing decline? Very simply, the same thing that caused the bust: affordability.
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