Wednesday, January 26, 2011
New-home sales rise
this article talks about how the housing market has shown some signs of improvement lately. some economists believe that this jolt is only because of the california tax credits that expired at the end of the year. this article also mentions that there are high expectations for the housing market in 2011. I still believe that it will be several years before we see a full recovery in the housing sector.
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After reading this article, I went to look at other news sites to see what they said and found something interesting. When I searched the new york times website for housing market articles the first two contradicted each other - "U.S. Home Prices Slump Again" and "Housing Sector Profitability Returns".
So which is it ??
Home sales rising, Home prices dropping and housing sector profitability returning are not necessarily statements that contradict each other. Home prices dropping can increase sales and therefore restore profitability in the housing sector. There are many other factors that come into play, and the stability of the prices is volatile, but these three things can happen at the same time.
After ridiculous price increase in housing market before the recession, prices are finally returning to their normal level. I would expect home prices dropping even further as consumers confidence is still way below 100 and people are unwilling to take out mortgages.
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