It’s looking like 2013 may finally be the year that the housing industry begins to fully recover, bringing with it the rest of our economy, according a group of economists surveyed by CNN Money.
More than half of those surveyed by the news organization predicted that the housing market will be the leading force in economic growth in 2013. The rest of the economists cited domestic energy production, consumer spending and the Federal Reserve stimulus almost equally as driving growth factors.
Why housing? The downfall of the housing market starting in late 2007 and continuing through 2008 (and beyond) is considered one of the main factors in the economic recession. For the past several years, people have put off buying homes, leaving record numbers of homes sitting on the market as foreclosure rates skyrocketed.
But now, record-low mortgage rates are making it easier for people to buy, contributing to an increased demand for homes.
According to the survey, 2012 saw a 28% increase in “housing starts”–when construction on a new home begins—and with nearly one million starts predicted for 2013, this year is looking to be on par. However, the CNN Money article also states that others, such as Moody’s Analytics, are predicting a much more aggressive growth rate of 50% year-over-year. As the supply dwindles, someone has to step in to build new homes. And this means jobs—more than one million new jobs in 2013, according to Moody’s.
On the flip-side, rising home prices and dropping foreclosure rates are making it easier—and more lucrative—for homeowners to sell. The survey predicts about a 3.7% increase in home values.
That may not sound like much, but, as Joseph LaVorgna, chief U.S. economist of Deutsche Bank, told CNN Money, “One of the most significant indirect effects from the housing recovery is the ‘wealth effect’ on consumers due to the recovery in home prices. Even small moves in home prices can have large effects on consumption, because housing comprises such a significant share of household assets.”
After all, these houses need to be filled with appliances, electronics and furniture, which means a boost for other parts of the economy, too.