Many are debating whether or not the real estate market is on its way back to normalcy, and not a stunted normal with fewer expectations, but back to the high trends we saw in 2005. While some are optimistic, there is still a long way to go, with plenty of chances to fall back to the dismal numbers that were seen in the past few years.
Home sales have risen over time, but one can hardly call it a recovery when the mortgage rates are the lowest by far in history. When the rates normalize, sales are sure to suffer. Careful planning is needed to make sure this does not do too much damage to the market.
Some larger cities show promising numbers, but looking deeper there are still issues at hand. Low income neighborhoods are still struggling mightily, with foreclosure rates climbing in some areas. Detroit, for example, is turning many unused structures into green space. It is not likely it will recover in the near future.
There are positive signs, however. There have been increases in home prices, as well as an increase in demand for apartment units. This could have a positive long-term effect on the market, with home sellers no longer having to have homes listed for many months at a time. They now have the power to find the right deal, and potentially come out ahead.
One potential issue is the amount of available builders in places of high demand. Once the market starts to thrive again, new homes will be needed to address the demand for young professionals who are looking to get into the market. This may seem simple, but it is not. There has already been an increase in home building in some areas, and this is before the market is even close to recovering fully. Many small businesses were lost during the recession, including construction companies. These will be needed to address the new demand.
This is also affecting home sales. While they are growing, the lack of inventory is causing the overall market to be stagnant. When the business involved with real estate recover, the entire process will pick up and allow the home builders to meet the demands of the market.
These are just a few of the issues that still remain in the real estate market. It is fairly clear that there is still a long way to go before things return to normal. One thing is for certain, careful steps must be taken to ensure that mistakes are not made, which might cause the market to lose what progress it has made in recent times.