As I look around my own house, the prospect of owning a brand new home is exhilarating. Maybe it’s that we have been in our home now for 10 years and the dents, scrapes, gouges, stains, and cracks are starting to add up. So what’s up with “new construction” (as we call it in the biz) across the country?
Of the two graphs shown up top, the upper-most shows the steep decline and slow turn-around of the housing construction market after the pandemic supply of unfinished and vacant, bloated McMansions that dotted the landscape five years ago. You can see that we are in a healthy, sustainable recovery. While the National Association of Home Builders laments that Housing Starts were only 50% of “normal” in 2013, they also predict a return to normalcy by late 2015. Let’s hope things heat in more ways than one for the sector; today’s data show that Building Permits decreased by 3.0% and Housing Starts dropped 9.8% from the month previous. This is an annualized number and should strip out seasonal abnormalities.
The second graph confirms CoreLogic’s recent report showing that home prices have regained 90% of the value realized during the peak in 2007. While defeatists may cry “bubble”, Kiplinger (one of my faves) forecasts 4.2% and 5.2% increase in home values in Salt Lake and Utah Counties, respectively.
Interest rates have improved over the last week. Fifteen year rates are down in the 3.25-3.5% range, while 30 year rates for FHA are at 3.75% and conforming conventional loans are at 4.375% today (APR will be higher, depending on the amortization term, and the loan and down payment amounts–as closing costs and the presence of mortgage insurance affect each loan differently). The respite from rates hikes is certainly welcome, though in my opinion, temporary