If you woke up this morning feeling slightly more invigorated… or maybe your coffee tasted just a bit better… maybe you found a $5 bill in your coat pocket on your way to work. It’s no coincidence: The Wall Street Journal has declared an end to the nation’s extended housing bust.
To bolster its claim, the Journal looks at four factors it says show sustained improvement in the housing market.
1. Slowly increasing home prices
A look at the Federal Housing Finance Agency and Case-Schiller housing price indices are beginning to trend toward positive growth.
2. Increase of existing single-family home sales
Though the month-to-month numbers go up and down, we appear to have dug ourselves out of the crater from when home sales hit bottom about two years ago. Some of these homes have been bought by investors who are now renting them out. Regardless, the home vacancy rate is the lowest since 2006.
3. Housing starts are improving
This is the indicator that needs the most spin, as housing starts are still 60% below where they were 10 years ago. But the fact that we’ve seen some uptick and relatively steady growth since early 2011, gives some credence to the notion that the housing market has begun to move out of the trough.
4. Home building is finally contributing to the GDP
Between 2006 and 2011, home building was on the negative side in terms of contribution to the GDP. For the last year, that trend has flipped, with home building actually contributing positively to the GDP at levels similar to pre-bubble years.
“From here on, housing is unlikely to drag the U.S. economy down further,” writes the Journal. “It will instead reflect the strength or weakness of the overall economy: The more jobs, the more confident Americans are about keeping their jobs, the more they are willing to buy houses.”
However, the Journal admits that if the inventory of homes that are currently underwater or facing foreclosure were to flood the market, it “could reverse the recent rise in prices.”