From Crash to Climb: the housing market recovers?

The one thing that hit family wealth the hardest in the past decade: the housing market crash. Not only did decreased home values force families to stay put, the impact reached far beyond a moving halt. Those who found themselves unemployed also found their job searches diminished due to the lack of mobility. Finding a job outside of a commutable range was simply out of the question.

But have we reached an end to the dark decline? Dare we say we have reached the bottom of the hill and are ready to start the slow and steady climb up? Consumption has begun to increase and values do seem to be recovering (roughly 5% greater than the previous year as of October), but with what do we measure a full recovery? Some, including The Big Picture at ritholtz.com, argue that 2012 could forever be known as the year the housing market recovered. We'll let you decide.

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Was 2012 the Year the Housing Market Recovered?

By: Daniel Carroll and Samuel Chapman 

On many occasions during the past few years, housing market conditions have been cited as a key factor contributing to the slow recovery. For a typical household, the largest component of wealth is house value. As house prices fell and sales were depressed, household wealth shrank. The decline in house values has been indicted as leading cause of restrained consumption, as households saved from current income to recoup the loss in housing wealth. The decline in house values has also been suggested as partly responsible for stubbornly high unemployment due to “lock-in,” where a household that is underwater on its mortgage limits its job search because it cannot afford to move.

Fortunately, over this past year there have been signs of modest, yet sustained, improvement in the housing market. According to the latest report, sales of single-family units, both of new and existing, have been up year-over-year from January to November. The latest month shows new and existing sales up by 15.3 and 12.4 percent, respectively, compared to their values in November 2011. Since April 2012, monthly sales of existing multifamily units have also been positive relative to the previous year, with the November data turning in a whopping 33 percent increase.