The free-fall in housing prices we’ve seen across the U.S. in the last few years has been staggering–and since my office is headquartered in Reno, Nevada, my employees and I have personally felt the sting of this trend. Nevada is one of the worst housing markets in the country, with the state posting year-over-year price declines of more than 30% for the average house! I also have the unfortunate honor of owning a second home in Florida, where prices are down 35% compared to last year.
But it looks like at long last, we are at or near the bottom of the housing slump. The National Association of Realtors announced that existing home sales have risen for three straight months. Additionally, the Commerce Department announced that new home sales have also risen for three straight months, with June’s sales up an impressive 11% and now at the highest level since November 2008.
There’s more: 13 of 20 regions surveyed in the latest S&P/Case-Shiller report posted their first monthly rise in prices in 34 months! Inventory is still high, with about nine months’ worth of homes on the market, but is now at the lowest level since April of 2007.
I must add that real estate is all local, and depending on where you live, things could be much better or much worse than these numbers. Nevada’s housing market is still a mess, and Las Vegas remains one of the glaring exceptions to the broader housing rebound.
But things are looking up, especially for lower-priced homes. Americans are taking advantage of tax incentives for first-time buyers, and as consumer confidence improves, more and more people will feel comfortable enough financially to buy a new house. And as banks resume making more jumbo loans, homes above $1 million are expected to begin to gradually recover.
We’re certainly not out of the woods yet on housing, and we need to see a few more positive reports before clearly calling the housing crisis over and done with. But these signs of improvement go along way. Since the financial crisis was prompted by widespread foreclosures and housing problems, improvement in housing is crucial to providing stability to the overall economy and the financial sector. Also, as home prices stabilize and Americans get over the “sticker shock” they experienced when property values were plummeting, this will improve consumer sentiment and spur spending again.