“I feel as confident as I have since the crash began that it’s now coming to an end,” Zandi said. “With a little luck, I think we’re going to be feeling better about housing six months from now and certainly a year from now. . . . All the fundamentals for housing are much, much better today than at any time since the crash.”
What do Zandi and other housing experts see in the drumbeat of less-than-stellar data that struggling homeowners and a skeptical public do not?
In a word: Progress.
“We’re not off and running, it’s not boom times,” Zandi said, but “there are signs of life.”
Those signs include an improving job market, which means fewer people falling into foreclosure and renewed confidence among potential buyers. Mortgage rates remain near historic lows. Inventories have shrunk to more normal levels. Lenders have shown a willingness to loosen up, if only slightly, on tough credit standards that have remained in place since the boom turned bust more than five years ago.
In addition, the confidence level among U.S. home builders has remained at its highest point since 2007 and sales expectations have continued to climb. Permits for new housing construction have surged to the highest levels in years. Prices have fallen enough to attract investors and individual buyers, some of whom have sparked bidding wars, from Washington state to Washington, D.C.
Dino Pasquali, a real estate agent who works in Northern Virginia and Northwest Washington, has seen those bidding wars as eager buyers encounter shrinking inventories. On Tuesday, he was helping a client try to buy a home in Arlington County that had three offers pending.
“Things are starting to move,” said Pasquali, who attributes the lively market in part to low unemployment and high turnover in the area. “We’re past the worst of it. We definitely hit our bottom, and we’re on our way up.”
Ted Gayer, co-director of economics studies for the Brookings Institution, noted that the housing market has experienced occasional spurts in recent years, leading some experts to predict prematurely that it was on the mend. But he said those short-lived periods happened largely because of artificial factors such as the federal government’s first-time home-buyer tax credit, which expired two years ago. Not so today.
“There’s not substantial government intervention in the way there was before,” he said. “It’s more driven by the market. . . . It looks like the beginning of the recovery.”