Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, Associated Press
It was — note the past tense — the worst housing recession anyone but survivors of the Great Depression can remember.
From the frenzied peak of the real estate boom in 2005-2006 to the recession's trough earlier this year, home resales fell 38% and sales of new homes tumbled 76%. Construction of homes and apartments skidded 79%. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.
A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.
Now take a deep breath and exhale. The worst is over.
By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9% from January, on a seasonally adjusted basis. Sales of new homes have climbed 17% during the same period. And construction, while still anemic, has risen almost 20% since the beginning of the year.
Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.
"The freefall is over," says Dean Baker of the Center for Economic and Policy Research.
The problem is that, Baker, like many economists, expects the housing market will "be bouncing around the bottom" for the second half of the year.
There are also real threats that could poison this budding recovery. The unemployment rate, which is 9.5%, is expected to surpass 10%, leaving even more homeowners unable to pay their mortgages. Mortgage rates could rise, making homeownership less affordable. And the federal tax credit for first-time homebuyers, which as lured many into the market, is set to expire on Nov. 30.
"As long as jobs are being lost, regardless of all the federal programs out there to help the borrowers, you're still going to have problems in the housing market," says Steve Cumbie, executive director of the Center for Real Estate Development at the University of North Carolina's Kenan-Flagler Business School.
True, but when you've got bidding wars for foreclosures in places like Las Vegas, Phoenix and Los Angeles, it's time to call the bottom.
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