Housing market shows signs of life

The housing market is starting to show small signs of recovery. Increasing consumer confidence is starting to have an effect on a sector that was punished by the economic crisis. Official numbers show that housing prices are starting to increase for the first time in six years after they fell 32% on average since the real estate bubble burst. It will never be the same again, which is a good thing. If a new bubble came, that would show that we didn't learn our lesson from the crisis.

Housing loan defaults remain high, although they have fallen off in volume somewhat and new loans are being granted. Still, prices will not return to their pre-crisis levels. One proof of this is that new houses are not selling as quickly as existing homes. For every 4 new homes sold, 6 old homes are sold. The old stock houses were mostly built during the peak of the real estate boom, and numbers show that we are near the end of a long drop off in prices and sales volume.

The people with money to spend on houses are starting to realize that current prices are attractive and that we are at an inflexion point. But the sector is still under pressure and the number of interested investors is not large enough to fix it overnight. Small signs of life are good enough for now.