The State of the Housing MarketThe housing market has a healthy glow so far this year. It’s influencing employment rates, keeping interest rates low, and supporting the overall growth of the economy. But that doesn’t necessarily mean it’s all fixed.
In May of 2016, existing home sales was better than it has been in nine years. While the market is certainly better, there may still be a long way to go.
Home sales in millions
Source: The Wall Street Journal, National Association of Realtors
Higher-end housing markets are taking a bit of hit right now. Affordable housing is the buzz word you’ll hear more than any when it comes to the state of the housing market. Middle to lower end markets are strong and will continue to grow while the demand for affordable housing continues.
When all’s said and done, “the market is really about price” Mary Ann Tighe, CBRE Tri-State CEO told CNBC Squawk Box in the final days of September.
Median existing home prices are on the rise, but still well below where they were at the height of the market in 2005. One reason for that is simple supply and demand. From 1970 to 2000, single-family home starts averaged over 1 million. So far in 2016 the average is just over 7.6k. As long as interest rates stay low, affordability shouldn’t be difficult to maintain.
Does the political atmosphere influence the economy and the housing market? The short answer is yes. Politics, especially in election years, do tend to make the market a bit sluggish. Tighe also told CNBC that uncertainty of any kind influences the housing market. People aren’t as willing pull the trigger when things are uncertain.
A home is a big investment and any distraction, especially one of great magnitude like the future of the country, makes people “put on the pause button” said Stephen Ross of Related Companies to CNBC. It doesn’t necessarily cause a downturn, just a slowing of the market while people process the political atmosphere.