The housing recovery appears to be on track and growing stronger. Home sales and prices are up after reaching bottom in 2010, foreclosures and mortgage delinquencies are dropping, yet housing affordability still remains high.

So why are some analysts and economists concerned?

At a recent Milken Institute Global Conference in Beverly Hills, Calif., panelists said that threats to the housing recovery still remain. The biggest threats they pointed to included:

  1. Land scarcity: Real estate developers are struggling to find desirable land to start new projects, which is limiting the supply of new homes. A few years ago, banks took ownership of land after developers had foreclosed on some projects. The land is worth less than its original price so banks are reluctant to write off additional losses by selling it too cheaply. Plus, lenders remain cautious about issuing loans for new land purchases.
  2. House flippers should be cautious: Housing affordability is high mostly due to super low mortgage rates, and investors are taking advantage with intentions of flipping homes for profit. “No doubt you can buy a house today and get a really good price and a low-interest loan,” says Jeff Greene, president of Florida Sunshine Investments. “But if you want to sell that house to somebody two or three years later and rates go up to 5 or 6 percent, how much is he going to pay for that house?”
  3. Foreign buyers potentially inflating prices: In some markets, strong demand by foreign buyers has helped home prices recover, which has made homes more expensive for Americans in some areas. Some analysts fear that it could even lead to another housing bubble if interest rates started rising quickly as well. Markets like Miami, Los Angeles, and New York are seeing strong demand among foreign buyers. Some say this is a good thing, because it reflects a strong faith in the U.S. market.
  4. A ‘patchy’ recovery: Some markets are seeing rapid increases with bidding wars, rising prices, and low inventories, while other markets are still at a standstill. For example, Miami’s housing market is “on fire” while 80 miles north in Palm Beach County there’s a “huge glut of housing,” says Greene.

Source: “5 Reasons the Housing Recovery Remains Wobbly,” U.S. News & World Report (May 3, 2013)

  • Inlet Cove is near Fort Belvoir and Potomac Mills

    Inlet Cove outside Belvoir
    Inlet Cove is alongside Route 1 This neighborhood of townhouses is near grocers and eateries Inlet Cove is close to Fort Belvoir, Alexandria, and Potomac Mills shops, in the city of Woodbridge Interior to these properties are multilevel Inlet Cove is serene Related

    Read More

  • Pending Home Sales on an Upswing

    home inspector
    Pending home sales increased again in March, affirming that a surge of home sales is unfolding for the spring home buying season, according to the National Association of REALTORS®. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, rose 5.3 percent to 102.9 from 97.7 in February, and is 21.1…

    Read More

  • A Good Time to Buy a High-End Home

    Station Square
    Some of the best housing deals are on high-end homes, many over $1 million. Some of them need TLC or they aren’t in the most-coveted locations. But there are plenty of desirable properties and lots of sellers who are getting impatient. Buyers with cash have the best opportunities. Buyers who need a mortgage should move…

    Read More

  • Looking for the big price drop?

    arrow down
    If you love price drops we have good news. NesbittRealty.com now features the biggest and most recent price drops on area real estate. We have condos, townhouses and houses all with big price reductions. These HOT properties will attract a lot of attention so contact us to take a closer look. In general we look…

    Read More

  • Who is today’s homebuyer and why are they buying?

    Nesbitt Realty 703 765 0300
    The National Association of Realtors recently did a study about the characteristics of home buyers. Some of the findings might surprise you. Thirteen percent of buyers purchased a home with one or more parents and grandparents together with adult children. There were several reasons given for purchasing a multi-generational home. Cost savings; Children over the…

    Read More

Real Estate Buying Tips, ,