Thursday, September 17, 2009

Is the Market Stabilizing?

Well, there are conflicting opinions but in general most economist believe we are seeing some good signs of a recovery taking place. As we all know, the historical recession we have been experiencing since December 2007 (technically speaking) was created by the housing crisis, or more accurately, the Mortgage Crisis!

This weeks housing starts report for August shows some mixed data but also some good news that points to stabilization in the housing market... possibly. On a national level, new housing starts rose in August 1.5% from July to a seasonally adjusted rate of 598,000 according to the Commerce Department. which was mostly due to the volatile multi-family segment which rose 25.3% to 119,000 annual pace and reversing the previous months slight decline. Ground breaking for single family homes actually fell 3% in August after five months of increases!

Though the above reported numbers are good news and show signs of healing in the housing market, if compared to August 2008, the housing starts have declined by 29.6%... and August of 2008 was during the recession so was already down significantly from the previous year! Homeowners facing foreclosure continue to increase and there are more homes being sold as Short Sale, Foreclosure or REO (Real Estate Owned) than any other segment of homes.

As for unemployment... the Labor Department reported that new claims for jobless benefits fell by 12,000 last week to 545,000, the lowest since early July. However, there are still 6.23 Million jobless collecting unemployment and those numbers are continuing to increase. Here in California we are well into the double digits and expect to hit 12% before the year is over!

Continuing on the positive side, remember that improved housing starts and the stabilization of the housing market is the first step towards economic recovery! With new housing starts, new jobs are created, products are manufactured and purchased and our Gross Domestic Product improves!

On a more local note, the San Francisco East Bay Area housing inventory is down significantly over last year by 40%. New housing starts are mostly flat and many sellers of homes that are priced right are seeing multiple offers! The First Time Home Buyer Tax Incentive of up to $8000 is scheduled to run out December 1st and so many buyers are trying to find their home and close escrow before the November 30th deadline.

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