Builders broke ground in December on the most new housing developments in four years. And interest rates on mortgages are expected to remain near all-time lows through much of the year, galvanizing once-skeptical buyers.
Together, those factors have helped the beleaguered housing market regain its footing and emerge as one of the economy’s bright spots this year.
“I said to my husband, ‘We’ll never see this again in our lives,’ ” said Tracy Lamb, who recently purchased a three-level home in Gainesville, in Prince William County. “I really did feel like we were going to miss out.”
Industry experts caution that the market’s recent strength does not signal a return to the heady days of the housing boom. Nearly 11 million homeowners are still underwater, owing more than their homes are worth, and prices remain well below their peak in 2006. Government data showed a larger-than-expected drop in the pace of home sales last month. The Federal Reserve has begun debating when to withdraw support for the mortgage market, and economists expect interest rates to rise before the end of the year, potentially tempering demand.
But there is growing consensus not only that the bottom has been reached, but that the housing recovery is real. In the Washington area, that translates into construction crews again mobilizing in some of the region’s hardest-hit counties. In Lamb’s burgeoning community of Madison Crescent, workers shrugged off the snow last week to install wiring and plumbing in a row of new townhouses. The single-family homes across the street sold out this month.
The return of real estate marks a key milestone in the country’s economic recovery — and not only because it was at the root of the collapse. A healthy housing sector could boost gross domestic product by more than $400 billion, based on housing’s historical portion of the overall economy. It is also a major source of new jobs in construction and indirectly supports industries as varied as retail and local government.
Mark Granville-Smith had planned to build a high-end community called Gaslight Landing on the banks of the Occoquan River in Prince William, where his company, Classic Concept Builders, has worked for more than two decades. He sold six units during the height of the housing boom — then the project stalled as the industry imploded. With the county processing as many as 700 foreclosures a month, there was little appetite for luxury townhouses with elevators and boat slips and price tags reaching nearly $1 million.
But Granville-Smith said he began getting calls from interested buyers again this past summer. So he called the construction crews back to work and sold four homes within three months. He recently got a request from a prospective purchaser in Michigan for a waterfront lot.