John Burns: Despite the housing struggle, people still want to buy
While the overall economy is starting to head forward through recovery, housing continues to stumble behind, according to a recent report card from John Burns Real Estate.
But consumers still believe the time is right to get in.
According to the report, 88% of the 10,000 potential homeowners surveyed by John Burns believe now is a good time to buy. For entry-level homeowners, especially, the market appears very attractive. Prices have fallen as much as 30% from the peak in 2007, and while mortgage rates are longer hovering at a 50-year low, the average 30-year fixed-rate mortgage is still below 5%.
But for move-up or move-down buyers, the timing has "rarely been worse," John Burns said. As prices fell, so did the available equity in the home.
The overall economy is improving. Real GDP was revised upward by 2.6%, and the employment growth increased again in January with the rate reaching 9.4%. Homeowners are even improving their home more than ever since the housing crash. According to John Burns, homeowner improvement activity increased for the first time since the second quarter of 2007.
But the housing market strength appears only in a few "regional pockets," Société Générale said Thursday.
Nationally, housing starts increased to 465,000 units by the middle of January, but activity still remains below historical lows. Vacancy rates in the U.S. have also improved in recent quarters, falling to 2.5% by the end of 2010, the majority of the U.S. remains oversupplied. Only five states and Washington, D.C. are undersupplied.
"The economy is starting to reach its long-term average outlook. Housing, however, is clearly going to lag the recovery rather than lead it," according to John Burns.
Write to Jon Prior.
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