Now, this is not to brush aside or minimize any of last week's sobering national economic news. Consumer confidence is way down and it's a serious psychological impediment to home buying.
Rising unemployment is scary. And the fact remains, someone won't consider buying if they are afraid of losing their job.
And of course shaky banks and big losses on Wall Street are all part of the same worrisome picture.
There are, however, some genuinely positive developments out there.
Let's start with housing affordability. What will ultimately get the turnaround ball rolling will be the ability of ordinary consumers, in large numbers, to afford to buy a home with their current incomes at current mortgage rates.
And right now, the affordability equation is at its most favorable point in decades.
In local markets across the country, more households with median incomes can now afford to buy the median-priced house than at any time since 1970, when the National Association of Realtors first began its "Housing Affordability Index."
Thanks in part to rising household incomes and continuing declines in the prices of housing being sold, the index jumped by 3 points in January alone and now stands at its all-time record high.
Here's another significant trend that gets almost no media attention: Almost all economists agree that a huge obstacle standing in the way of a housing recovery is the big overhang of unsold houses in inventory in many local markets.
But inventories have been steadily declining over the past couple of months, and in January alone dropped another 3 percent to the lowest level in more than two years.
We are burning off the excess unsold supply of houses clogging local markets -- and that bodes well for stabilizing prices in the months ahead.
Add in Congress's new $8,000 nonrepayable tax credit for buyers who haven't owned a house during the past three years and you've got the potential to pull hundreds of thousands of people off the sidelines and into the market during the remainder of 2009.
Published: March 10, 2009
by Kenneth R. Harney
