A few excerpts from the article:
- The potential for a strong housing recovery lies in the depths of the bust. Fewer homes will be added to the housing stock this year than in any year since records began in 1968. In September the inventory of newly built houses for sale fell to its lowest level since record-keeping began.
- Rental markets, by contrast, look far stronger. Nationally, rents rose 2.1% in the year to August, in stark contrast to house prices;Rising rents help housing markets heal on both the supply and demand side, by encouraging renters to consider buying and through the movement of supply into the rental market, easing the glut of houses for sale.
- However, The macroeconomic environment remains troublesome. Foreclosures are falling, but they continue to place downward pressure on prices.
- A new analysis by Goldman Sachs argues that housing can “punch above its weight” in recoveries. Rising house values boost confidence and spending. A housing recovery should also give monetary policy more traction; low interest rates do less to perk up the economy when housing markets are depressed. Indeed, the Federal Reserve is considering nudging recovery along by buying mortgage assets, which should ease the flow of credit to borrowers.
