Here is some interesting info I read recently that I thought I would share:


HOUSING OUTLOOK

End of Homebuyer Tax Credit Raises Concerns
Surrounding the Sustainability of the Housing Recovery

While two rounds of government tax credits have successfully buoyed home sales, the housing market remains a wild card for the economic recovery. Further strengthening will be crucial to support the economic recovery, however, as consumer perception of their personal balance sheets is often correlated to their housing conditions. Sales velocity is expected to retreat in the coming months due to the expiration of the government incentive, but housing demand has already bottomed and has entered a choppy recovery phase brought on by improving employment trends, low mortgage rates and affordable home prices. Weighing against a continued advance in activity is the likelihood that pent-up demand was released in recent months, while the ongoing flow of foreclosures will continue to apply downward pressure on prices.

Existing home sales jumped 7.6 percent in April, reaching the highest velocity since the first tax credit expired last November. The market remains far from equilibrium, however, as renewed buying activity inspired additional owners to list homes, driving inventories to 8.4 months of supply, up from 7.2 months at the end of 2009. The median price has risen 4 percent year over year, although some metro areas have recorded price declines, and prices remain well below cyclical highs. The flow of bank-owned properties will continue to pose a critical headwind in the housing market recovery; however, if employment growth strengthens, foreclosures and strategic defaults could dissipate significantly, enabling a housing recovery.

The outlook for newly constructed homes brightened in April, with sales velocity increasing 4.8 percent; sales of new homes have spiked nearly 50 percent year over year. Along with adding stability to the housing market, accelerating demand for new homes and declining new home inventory levels could provide a much-needed boost to construction employment. New home inventories have eased to just 5.0 months of supply, the lowest level since 2005, and the number of homes available for sale has reached the lowest level since the 1960s. After contracting by 1.8 million jobs during the recession, construction employment has expanded slightly in each of the past two months; continued gains would further support the recovery, particularly in traditionally high-growth Sun Belt markets.

The burst of the housing bubble will increase demand for rental housing as mortgage standards tighten and foreclosures drive down credit scores. Apartment absorption has been positive for four consecutive quarters and will strengthen over the next 18 months. Apartment vacancy will dip 30 basis points this year to 7.7 percent before improving nearly 100 basis points in 2011.
The recent stabilization in housing and employment markets has bolstered consumer confidence, which reached a cyclical high in May. While improving consumer expectations have recently translated into steady sales gains, if the housing recovery loses traction in the coming months, consumer spending could weaken significantly. During the first quarter, retail vacancy ticked up just 10 basis points to 10 percent, the smallest increase since 2007. By the end of this year, retailers will take on 15 million square feet, following negative net absorption of 63 million square feet in 2009.