The American Dream has at its core the idea of home ownership.  The dream, according to CNBC-All-American Economic Survey, is being acknowledged more and more. 79% of Americans believe home ownership is the essential piece of the American dream. 69% of Americans think owning is more advantageous to renting. Home ownership is regaining the confidence it had in re-recession times.

“The housing numbers are all heading in the right direction,” reports Diana Olick for CNBC. “Home prices up, foreclosures down and, perhaps the most important, consumer confidence in housing is swelling.” 

The one demographic that still seems to be the unknown element within the market is that of the first-time home buyers. There is a surge in first-timers looking for their first home, but they are highly dependent on their low down payment financing, and that may cause a plateau of actual home purchases. What are your predictions?

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 ATHOMEINBOZEMAN

Home inventory is reaching its lowest point since 1999. This is stabilizing home prices in many markets, and since buyer traffic is continuing to pick up, multiple offers and bidding wars are going to become the common state of things. Many sellers still remain underwater while buyers are ready to buy, causing the housing inventory to continuously shrink. Currently, there is a 4.2-month supply of existing homes for sale, down from January’s 4.5-month supply, according to data from NAR.

“Buyer traffic is continuing to pick up, while seller traffic is holding steady," Lawrence Yun, the National Association of REALTORS®’ chief economist says. "In fact, buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient inventory to improve sales more strongly. We've transitioned into a seller's market in much of the country."

Buyers and sellers alike are finding themselves in better positions then they found themselves at last year at this time. Price gains are being counter-balanced by low mortgage rates, and it is shifting to a seller’s market…. But it is not all good news.

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 ATHOMEINBOZEMAN

“Home values could surge 35% without stretching housing affordability.”

Household wealth in the U.S. has climbed in the fourth quarter to the highest level in five years. Good news is abounding. Household wealth is approaching pre-recession levels and that, in conjunction with the Federal Reserve pushing to keep lending rates low, consumer confidence is surging. “Growing wealth puts households in a better position,” said Paul Edelstein, director of financial economics at IHS Global Insight in Lexington, Massachusetts. “They’ve acquired a lot of financial assets, and that’s a positive for spending.”

The housing market is surely making its way to recovery. Single family home prices have risen in 88% of U.S. cities. Making claims that home values is predicted to surge seems to be substantiated based upon all the evidence. "During the peak of the housing run-up, affordability was stretched as the market sold off," Dosaj, vice president of the home price index at LPS Applied Analytics, said. "As home prices dropped, affordability dropped." (http://realtormag.realtor.org/daily-news/2013/03/01/economist-makes-bold-statement-home-prices?om_rid=AACuz5&om_mid=_BRMNeLB8xIsqgB&om_ntype=RMODaily)

 ATHOMEINBOZEMAN

Borrowers who are looking to refinance are shifting more and more to credit unions instead of banks. This is a result of many colliding events notably an overall disillusionment of the work, honesty, and values of the big banks.

“We’d be remiss if we didn’t give a shout-out to the major banks for being annoying to consumers and forcing people to seek out other alternatives,” says Bob Dorsa, the president of the American Credit Union Mortgage Association in Las Vegas. 

Credit Unions are seeing this national trend and working fervently to foster an atmosphere that keeps the customers rolling in. They are becoming as competitive as they can in regard to rates. In addition, credit unions tend to offer lower closing rates than most big banks, and by keeping their services in-house, credit unions are able to be more response and prompt in their service.

This is a strong trend, but the longevity of it is in question. “Historically, when rates go up and refi goes down, our share and origination volume drops,” Dorsa, he president of the American Credit Union Mortgage Association in Las Vegas, says. “We’ve made a concerted effort this time to get out in front of REALTORS®, so we hope we won’t take as much of a hit production-wise as we have in the past.”

Source: “The Credit Union Alternative,” The New York Times (Dec. 13, 2012)

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Housing Starts: A statistic referencing the number of residential building construction projects beginning during a specific period of time (most commonly a month). This serves as a key economic indicator of the viability and confidence in the housing market as well as the national economy.

It has been in the headlines for weeks now, but with winter finally settling in and marking the end of yet another year, the housing market continues its trend rising 3.6% in October, the highest rate since July of 2008. Housing starts are reporting to have grown nearly 40% compared to the peak the market achieved in 2006 at 2.27 million.

Seasonally adjusted, housing starts annual rate in October was 894,000 units with a particular spike, 11.9%, in multifamily homes (attributed for the high demand for rentals). Comparatively, single family homes held steady at their 594,000 units.

"This report is in line with our latest builder surveys, which show improving confidence and optimism in the marketplace as buyers take advantage of low mortgage rates and very attractive prices," says Barry Rutenberg, chairman of the National Association of Home Builders. "Builders are acting to meet rising demand while continuing to exercise caution by pulling a modest increase in the number of single family permits as the market continues to gradually gain its footing."

Specifically, the West (YAY MONTANA!) saw the greatest gains at 17.2% followed by the Midwest (8.9%), Northeast (6.5%), and the South (2.5%) respectively.  

Source: “Housing Starts Hit Highest in Four Years,” Reuters (Nov. 20, 2012) and the National Association of Home Builders

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