After the sub-prime catastrophic meltdown
became a household name (no pun intended!), the USA housing market is seeing a
gradual sign of recovery.
It's all about location, as you would
expect. Arizona’s capital city, Phoenix, is leading the USA in price
appreciation, surging 22 per cent in the 12 months through October. However,
where ever signs of recovery start, they soon spread. Increasing progress over the past six months
is a positive sign and the key driver remains affordability.
Teetering on the edge of a fiscal cliff,
the question remains can the USA continue to build on a long term recovery in
2013 and beyond?
The short answer, from all indications, is
That's because house prices, which topped
out in 2007, grew 7.4 per cent in November from a year ago. That's the biggest
year on year increase since 2006, when the housing industry was nearing its pinnacle.
With house values on the rise, the number
of "upside down" borrowers fell last year by almost 4 million, with 7
million still “upside down”, that total could drop a further 4 million within
two years, according to JPMorgan Chase & Co.
That's good news not only for the housing
industry, but for the entire economy.
"For most middle class households, houses
are by far their biggest asset," Karen Weaver, head of market strategy and
research at investment firm Seer Capital Management LP told Bloomberg News.
"So once the housing market starts to recover it helps consumer spending,
it helps the whole economy."
The improving housing market has already
helped the wider economy restore after the crash that prompted the worst
recession since the Great Depression. The unemployment rate has dropped to 7.8
per cent, the lowest level since January 2009 and Government officials in
December projected economic growth in a range of 2 per cent to 3.2 per cent in
2013. Consumer spending, which accounts for about 70 per cent of the economy,
is also showing signs of improvement. Retail sales rose more than projected
last month, according to Commerce Department figures today in Washington.
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