Friday, July 31, 2009

Professor Mulligan: A Housing Recovery Is Inevitable

A steady stream of mostly positive data over the past 90 days is convincing more academics and analysts that the housing bust has reached its conclusion. Chicago economic professor Casey Mulligan writes in the New York Times that the current data suggests that a housing recovery is basically inevitable. Dan Rafter from Mortgage Roadmap has more.

A growing number of economists are joining the chorus: A housing recovery has begun.

To that, we can all add a hearty "Hallelujah!"

The latest economic type to opine that the housing recovery is now in progress is University of Chicago economics professor Casey Mulligan. In a column printed in the New York Times, Mulligan says that all the latest reports on housing starts, home sales and housing prices point to the beginning of a housing comeback.

Mulligan says that basic laws of supply and demand pretty much made a recovery an inevitability. For instance, the U.S. population has continued to grow. At the same time, homebuilders during the housing slump basically stopped building new homes. This leads to an increased demand. Sure enough, housing starts have finally begun to rise again.

As demand for housing increases, Mulligan says, we'll finally see housing prices stop their steep fall. This will lead to an eventual rise in national housing prices again. Mulligan does say, rightly so, that housing prices will not return to their 2005 levels. But that was the height of a very unsustainable period of housing-value appreciation.

Reading a column like this is a soothing way to start your morning. Much of my income is tied into the housing industry because I write for several publications that cover the mortgage and real estate businesses. I'm thrilled to see things finally start to improve.

Personally, I'll know that the housing slump is history once all those real estate trade magazines begin assigning me stories on a regular basis again.

This article has been republished from Mortgage Roadmap.
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3 comments:

July 31, 2009 at 12:09 PM accuriz said...

"Mulligan says that basic laws of supply and demand pretty much made a recovery an inevitability. For instance, the U.S. population has continued to grow. At the same time, homebuilders during the housing slump basically stopped building new homes. This leads to an increased demand. Sure enough, housing starts have finally begun to rise again."

What? There's a lot of 'pretty much' and 'basically' in this article. Homebuilders halted on homes because no one was buying. There isn't an increased demand; we have a 9-10 momth surplus of vacant homes (this doesn't include the shadow inventory the banks are holding onto) Housing starts are rising because of the many incentives (the tax credit for one) and because of seasonal activity. But the light is still far away in this tunnel. www.accuriz.com

July 31, 2009 at 2:35 PM Sinclair said...

In California alone:
a total of 22,291 foreclosures were taken to sale at auction in June;

there were 45,691 Notices of Default (the first step in the foreclosure process);
there were 29,853 Notices of Trustee Sale(the second step), which sets the time and place of auction;

but postponements can delay a Trustee Sale for up to 12 months; once delay tactics are exhausted the foreclosure date and time are reset and considered pending (meaning there are no more steps) there were 113,141 pending foreclosures in June. These are properties where the homeowner will be gone soon.

These numbers dwarf the new home starts. True,we are seeing some improvement but there we still have a long way to go.

http://bank-o-meter.com/bank-o-meter/component/content/article/1-latest-news/198-great-news-massive-macker-off-the-california-coast

August 1, 2009 at 4:58 PM jay said...

I hope she said more than what was written in this article becasue anyone who has taken economics 101 could have said the same thing about any industry.

One thing that was not mentioned is the fact that there was a lot of demand in the past by investors that simply will no longer be there for legal reasons.

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