Are Signs Pointing to a Housing Recovery or Relapse?

Are we alone in being a bit confused by recent reports on the state of the housing market? Two recent articles muddy the waters on whether signs are pointing to a housing market recovery or relapse.

Stefanos Chen, at The Wall Street Journal, is bullish on a housing recovery based on encouraging trends in a new Urban Land Institute forecast for the next three years. Chen believes, "The housing market may finally be on the path to a sustainable recovery," based on the forecast, which "predicts that single-family housing starts will jump by 2014, from 428,600 in 2011 to a projected 800,000 in 2014. As demand improves, home prices may rise as soon as 2013 and prices could tick up by 3.5% after the third year."

Meanwhile, at CNBC, Diana Olick is bearish on the nascent recovery. New housing data released last week, and a disappointing "pending home sales" report released on Monday, has Olick feeling pessimistic. She points to the abundance of investors pushing the market, while necessary, as a sign of weakness.

"Don't get me wrong, investors buying up the distress is necessary to cleanse the market, but it is not real recovery. Mortgage originations are at a 12-year low, despite record low rates. Normal, "organic" home buyers, move-up owner occupants, are not flooding back into this market. Rents are still rising."

Olick concludes, "Yes, we are ahead of where we were, but as we've noted so many times here on this page, rising foreclosures will put added pressure on this market, and we may not be out of the woods yet."

Full Story: Forecast Upbeat on Housing Recovery

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