Consumer Confidence and the Housing Uptick

By all accounts, the news coming from the Case-Shiller home price index is good news, an average increase of 10.9% is nothing the scoff about (http://bit.ly/6Ivqgq). Granted, this is an average–areas like San Francisco experienced explosive growth, up 22.2% which led to some skewing of the numbers, but it’s irrefutable that the signs all point to steady growth in the housing market. This isn’t just good news for the housing market, of course. As one of the biggest roadblocks to a full-fledged economic recovery, improvement in the housing market is both a sign and an imminent promise of the economy on a whole recovering. Here are a few reasons why it’s an important shift and what possible outcomes can be expected from it.
 
The why:

     

  • Housing is valuable again.  For the last couple of years, homeowners, real estate agents, and anyone in the business surrounding housing found themselves in something of a rut. Whether you made a business out of handling the various aspects of buying and selling homes, or you were looking into buying or selling a home yourself, the market was in such bad shape that it seemed like a bad idea even for buyers. Now the prospects of making a valuable return on a past investment are starting to look better by the day.
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  • The newest generation entering the workforce can actually look forward to owning a home again.  Once every four months it seems, some new study will come out talking about how the current generation leaving high school and college to enter the workforce finds itself disproportionately living in rentals or living with family. The economy hasn’t been in the best shape for the students making their way out, but with the surge in housing prices, it’s definitely looking to pick up.

 
The what:

     

  • Economic growth, in general.  Simply put, if one area of the economy is thriving, it’s more likely to carry some of those profits into other areas of the economy, particularly for an area as vast as the housing market. Not only will a stronger housing market allow all of the enterprises surrounding it to prosper, it’ll also provide families with more options for investments and most importantly collecting returns on those investments.

 
Does the housing market improvement mean we should throw our hats in the air and rejoice, claiming the recession is over? Far from it. Should this still be viewed as a sign of progress and potential future growth? Definitely. Growth is happening, steadily, and the housing market movements are an excellent litmus test for determining what’s left to come.
 
Image courtesy of www.morguefile.com http://mrg.bz/LKHeBX


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