Will 2011 Real Estate Sales Outpace 2010 Gains?
Economic Indicators Show Promising Real Estate Market Numerous economic reports are giving cause for optimism, particularly when it comes to key economic indicators such as jobless claims and home resales. According to reports, U.S home resales increased by more than anticipated in December, while last week’s new jobless claims fell by more than they have for almost a year. Other positive indicators include the fact that mid-Atlantic factory activity has been holding steady. Due to these factors and many more, economists are feeling optimistic about 2011. In fact, many are predicting that 2011 growth will surpass the growth that was seen in 2010. “Most of the reports today were fairly good.
Virginia Real Estate Market and National Numbers Considerations
For anyone skeptical about the U.S. recovery, these should ease concern,” said Kathy Lien, who is the director of research at GTF Forex in New York, in a recent Reuters article. While many of the recently released economic reports have provided good news, stock prices went down. According to reports, this is largely due to drops in the value of technology and materials shares. Furthermore, bond prices dropped, which pushes up the benchmarks that are used in determining mortgage rates. According to the National Association of Realtors, existing home sales in the United States increased by 12.3 percent to 5.28 million units per year. This far surpassed economic forecasts, which had predicted an increase to just 4.85 million. While this is certainly good news, an increase in distress sales has raised concerns regarding the sustainability of the overall increase.
It’s important to remember that all real estate is local. Austin homes will perform differently than the Virginia market. Likewise, sub-markets within any given market will perform differently. The new home market will perform differently than the condo market, for example. On the job front, the Labor Department reports that applications for new jobless benefits fell from 441,000 last week to 404,000 this week. According to analysts, this data represents a slow, but steady, improvement in the labor market.
While the U.S. economy has been showing improvement over the past year and a half, it has not improved at a fast enough rate to have an impact on unemployment rates. In fact, the rate remained steady at 9.4 percent in December. Clearly, a weak job market has an impact on the housing market. Therefore, signs of a recovery within the job market is essential to the growth of the real estate market. In terms of the Philadelphia Federal Reserve Bank’s measure of Mid-Atlantic manufacturing, a modest pullback from 20.8 in December to 19.3 in January was measured. Meanwhile, the Conference Board’s index of leading economic indicators reached the 1 percent mark, which is well above the forecasted 0.6 percent gain.
Reports have also shown that strengthening overseas economies have boded well for the U.S. economy by increasing demand for exports. In addition to the promising reports, Federal Reserve officials have committed to purchase an additional $600 billion in government bonds to further assist with the economic recovery.
About the Author: Eric Bramlett is the broker & co-owner of One Source Realty, a boutique Austin real estate company. Eric’s company specializes in Steiner Ranch Austin, West Austin, and Central/Downtown Austin.