And so a new year begins. Does it feel different?
Home prices in King County are still falling, but sales rebounded in 2011. Home buyers purchased nearly 2,000 more houses and condos in King County last year than in 2010. That’s up 9 percent, according to a year-end report from the Northwest Multiple Listing Service. The figures are similar for Snohomish County, where sales of single-family homes rose 9.6 percent. While home prices have fallen, the silver lining to these additional sales is the fact that the county listings averaged out to 3.69 months of supply. This is significant because economists estimate that a supply of three to six months indicates a balanced market.
The preference of most families toward owning their own home remains solid in spite of the current state of housing. A nationwide survey of more than 3,000 Americans, coupled with six focus groups conducted by BuilderOnline.com, indicated that lots of people would be buying homes right now if they had steady work, enough savings for a down payment and a cleaner credit record.
Seven out of 10 people responding to the survey said they believe it’s a very good time to buy a home. They cite current home values and inexpensive mortgages. A full 72 percent of the country still believes that owning a home is an important part of their family’s dream and the American economy. The focus group also showed that most people equate homeownership with success and stability.
Another significant fact is that while many homeowners are content with where they live, renters are much less satisfied, with only 25 percent saying their current home is fine. Forty-five percent cited financing challenges as a factor in why they hesitate to buy a home. Even so, only 22 percent of renters think that renting makes better financial sense than owning. Clearly the tight mortgage qualification standards are an impediment to a more robust housing recovery.
The desire to own your own home stands up even in the hardest hit housing market. Paul Dales, an economist with Capital Economics, was recently quoted as saying that the bump in home sales in the past three months is a clear sign that a housing recovery is now well under way. Hiring has improved, which is critical to a housing rebound. While we may be years away from a full housing industry recovery, if the housing supply continues to fall, prices could rise, providing a much-needed shot in the arm to housing markets nationwide.
Another hopeful sign locally was last month’s announcement that the state’s unemployment rate dropped to 8.5 percent. Officials said that between December 2010 and December 2011, overall employment in Washington was up by about 29,600 jobs. Last December’s unemployment rate was the lowest since February 2009, when the unemployment rate was 8.3 percent.
An economic forecast out last month called for the U.S. economy to experience modest growth this year. About two-thirds of the economists participating in the latest National Association for Business Economics survey said that they expected the national gross domestic product to grow at a rate of more than 2 percent this year. The growth rate needs to be better than 3 percent to significantly lower unemployment, but things are certainly moving in the right direction.
Sam Anderson is the executive officer of the Master Builders Association of King and Snohomish counties. “On the House” is his monthly column offering insight into the housing market. For more information on home buying, visit www.MasterBuildersInfo.com. Follow Anderson at www.twitter.com/mbaceo.
