There’s been quite a bit of negative press swirling around housing lately, but we’ve got some pleasant developments to hang your hat on.
There’s no two ways about it – the last few weeks, at least by headline standards, have been a pretty rough period for the housing market. From faltering home sales to slowing home-price increases, there’s been a negative story on housing lurking around ever corner thus far in 2014.
Is housing really doing that poorly, though? And are there grander trends taking place that bely the urgent tone of those headlines? Here are five things currently going on in housing that we can be proud of:
1. Home sales are finally balancing out – Yes, home sales are technically down from last year, but the make-up of those lower homes sales is markedly better than in years past, with distressed sales becoming less and less common. In just the last three years, for instance, distressed properties have gone from 40 percent of total existing-home sales to just 14 percent. Housing cannot fully recover until distressed sales return to their pre-recession levels, so such a decline is great news for the market.
2. Delinquencies are way down – Delinquent mortgages were perhaps the most visible sign of the housing downturn, but here in 2014, they are but a shadow of what they were at the height of the downturn. As of March 2014, 7.6 percent of mortgages were delinquent, which – though still historically high – represents a massive decline from the 14.4-percent peak of four years ago.
3. Negative equity is also way down – The change in the nation’s levels of negative equity has been nearly as dramatic. In 2013 alone, nearly four million properties returned to positive equity, with the number of properties in negative equity falling from 10.4 million to 6.5 million.
4. What mortgage rate increase? – Everyone has learned by now that last summer’s jump in mortgage rates was quite the shock to the housing market, but at this point, the impact of those increases has dissipated. As Bill McBride explained on Calculated Risk, economists have found that such shocks to the market last for three to four quarters, and considering that rates increased from May 2013 to July 2013, we’re almost near the end of that shelf life.
5. Nowhere to go but up – Finally, we should keep in mind that though lending standards remain tight and new home sales remain historically low, they only have one way to go – up. It may seem difficult to imagine now, but lending standards will loosen as the economy improves (they technically have improved in the last year, albeit slowly); additionally, the U.S. population will continue to grow, and people will continue to need housing – hence, home construction will commence.