Homebuilders and buyers alike might soon be able to celebrate, according to an article by the Los Angeles Times.
A slowdown in the Southern California housing market actually highlights the fact that the market there is continuing to normalize, said article author Andrew Khouri. This is because home prices and sales are now responding to job and income growth as opposed to loose lending standards or investors.
This follows a November 6th report from the National Association of Home Builders (NAHB) that claimed an overall recovery of the nation’s housing market is on the horizon. Hopefully, Southern California will not be the only state to experience a normalized housing market in the near future.
Housing prices in Southern California are no longer rising, due to investors leaving the market after no longer seeing deals. Sales are likely to pop back up next spring as the economy improves, according to Khouri’s article. Demand for homes has the potential to increase as the economy improves and mortgage rates don’t climb.
Markets in 59 of the approximately 350 metro areas across the nation are stabilizing, said the NAHB. These markets either “returned or exceeded their last normal levels of economic and housing activity in the third quarter of 2014,” according to an NAHB press release.
NAHB Chairman Kevin Kelly said that continued job creation, increasing customer confidence, and a growing economy will help bump up demand for housing.
In Southern California, weak price gains and little chance for an increase in middle-class incomes suggests that Americans should see houses as a long-term home as opposed to an investment, according to Richard Green, director of USC’s Lusk Center for Real Estate. Essentially, buyers should focus on whether or not it will cost more to own or to rent.
Overall, however, the NAHB identified that nearly half of the markets in its Leading Market Index were up since August, a sign that housing recovery could continue into 2015.