A "V" Shaped Housing Recovery Begins to Take Shape

With March data from the Census Bureau' s New Residential Housing Index and New Home Sales, we can begin to see the formation of a "V" shaped recovery in the housing market. Our economy is slowly building strength and momentum, and employment will begin to increase. This will lead to increased housing demand from new household formation. As "pent up demand" from young people living with their parents, and divorced couples living together lead to new household formation, "shadow inventory" should be reduced or eliminated. Many of the houses counted in "new homes for sale" are now bank owned, and many are in disrepair or are uninhabitable. Additionally, most of the true bargains are gone, and the prices of homes are going up. People tend to put off purchases as prices fall, and tend to accelerate purchases as prices rise. All of these factors together should combine to give real underlying strength to the housing recovery.