‘W hile home purchases are still the embodiment of the American dream, the following information has been gathered through housing experts and what Orange Key Realty’s sales associates have encountered with its customer base,” says Michael Matthews, broker/owner.
This information demonstrates that current housing will add half a percentage point to GDP growth. By 2014, it will once again be a significant contributor to job creation, consumer spending and economic gains, bolstering this weak recovery. Every $100 bump in average home prices lifts consumer spending by $5.
The number of unsold homes is easing and the foreclosure tsunami is fading, with the share of mortgages delinquent by 90 or more days a third lower than in 2010. Distressed sales are now a fourth of the total — lower than last year, though still high. Mortgages are sure to remain near historical lows for a year or more, thanks to ongoing monthly buying of mortgage-backed bonds by the Federal Reserve.
A surge in pent-up housing demand is inevitable once the economy starts to pick up some more steam and young folks who delayed home buying plunge into the market. “The usual rate of household formation — young men and women leaving their parents’ nests and setting up their own abodes, plus new immigrants establishing households in the U.S. — has been set back in recent years by the recession,” states Ofir Hillel, broker/owner. “As a result, there are now about 4 million fewer households than there would be had the historical trend continued. Those households to-be will come flooding on the market.”
Sales of new and existing homes are climbing: 20 percent for new homes this year and 18 percent next year. For existing homes, a 2 percent gain in 2013 will follow about an 8 percent jump in 2012.
One factor fueling the gain is buying by investors, many of them paying cash for the properties. But the investment isn’t the kind of get-rich-quick, buy-and-flip purchase that fanned last decade’s housing market boom and subsequent bust. Investors figure their properties will yield a positive cash flow right and earn a profit month after month.
Orange Key Realty’s staff of sales and broker associates can be reached at either 863 Georges Road, Monmouth Junction (732-297-6969) serving Middlesex County, and 60 Main St., Freehold, (732- 863-6969) serving Monmouth County. Visit www.orangekeyrealty.com.