Setting the stage for recovery
Many economists consider the rebound in the housing market to be the key to a stronger recovery in the overall economy, and N.C. State University’s Mike Walden says there’s evidence we’re moving in the direction of a housing turnaround.
“Of course, in economics we always look at supply and demand. And the good news is that we’ve had a considerable slowdown in the supply of homes for sale. And what that’s going to do is eventually support a rebound in construction.
“For example, the number of vacant homes available for sale has been more than cut in half since their peak in 2007. Similarly, the number of new homes being constructed is 80 percent under — 80 percent under — their 2006 peak.
“So when you have a situation where supply actually drops under the number of buyers, and we’ve actually seen that in several cities, that’s really the point at which you’re going to see the market strengthen. And so since we’ve seen this nationwide, but in particular we’ve seen this in several cities — for example, in Florida — and even in the broad South.
“There is some encouraging news I think on the housing market. But don’t look for a big burst of activity. But at least we’re moving off dead center.”Category: Economic Perspective