After the crash of 2008 and the ensuing recession, the housing market has looked bleak. However, there are signs that a recovery is on the way, or has even already started.
Here are eight signs that the housing market is making a definite recovery. While not definitive proof that the housing market is recuperating, they strongly indicate that there are better days ahead in December of 2012 and in 2013.
1. Increase in Framing Lumber Prices
The price of framing lumber is an excellent indicator of how the housing market is doing. Low framing lumber prices indicate that the market is in a slump, and the inverse (rising lumber prices) indicates that more building is coming.
Currently, in the beginning of December 2012 framing lumber prices are at the highest they have been in the last six years, expect for a brief and uncharacteristic spike in April of 2010. This means that the market is poised for a strong rebound.
2. Increasing Single Family Home Sales
Single family home sales are also an excellent indicator of the housing market as a whole. If they are going up, then it means that family are judging it’s a good time to invest in a house – a reassuring sign to economists.
Recently, single family home sales have also increased. This is yet another positive sign for the economy.
3. All Existing Home Sales
Single family home sales are important, but an increase in existing home sales is even better. At the end of November, Forbes judged that the housing market is now 47% back to normal.
This increase strongly signals the housing market as a whole is recovering. This is an even better indicator than single family home sales, since this represents the entire housing market.
4. Developers Start Building And Real Estate Franchises Start Selling
When developers start building new houses, this is really time to sit up and take notice. This is especially true when a strong real estate franchise like HomeSmart and others start expanding their business.
Big real estate franchises have a lot to lose if they misjudge the market and try to sell a lot early, especially into a bad economy. The strength and actions of these real estate franchise indicates that the economy is already recovering, and poised to get even stronger.
5. Building Permits Are Valued higher (And More Are Being Issued)
The price of building permits indicates the relative health of the entire housing market. Lower values of course mean that nobody wants a build, a depressing sign, but in increase in building permit value is a great indicator of recovery. The rate of issuance of building permits increasing is also a positive trend.
According to TD’s Mr. Gauthier, the recent increase in the issuance of building permits means that the market is recovering. However, this indicator is not as strong as others – so while the market is getting stronger, it isn’t nearly recovered yet.