It’s possible to imagine that there is more pain to come in the housing market. But when Time magazine starts running covers that declare “Owning a home may no longer make economic sense,” it’s time to say: Enough is enough! This is what “capitulation” looks like.
Media voices seem to have given up. For months, all we’ve seem to hear are negative outlooks from economists trying to predict what will happen in the housing market. But despite continued discouraging data from the real estate sector, a few bullish arguments are beginning to emerge. One MIT economist even believes that demand for new homes exceeds residential construction.
Some voices and factors of note:
Credit Suisse says the worst is behind us and that fear of another hit on the housing market is just overreaction.
There is government support of about 70% of home mortgages, a stabilizing factor that will likely keeping prices from revisiting the plunges seen in 2007 and 2008.
Bill Wheaton, an economist at Massachusetts Institute of Technology’s Center for Real Estate, thinks the housing market is poised to make a strong comeback, calls home construction “a sleeping giant that is about to wake up.” He’s predicting not just a comeback, but a strong one.
Wheaton thinks much of the excess home inventory will either be sold, occupied or otherwise absorbed by 2013. But from 2011 onward, he anticipates a demand equal to pre-recession levels. Furthermore, he believes the recovery of home construction could boost overall GDP at levels unseen during recoveries after previous recessions, with the exception of the massive building that happened right after World War II. And this is not a new prediction on his part; Wheaton expressed the same opinions in a white paper written in 2009.
And in a recent WSJ article, Brett Arends gives us 10 reasons to buy a home now, despite the nay-sayers. His top 10 list:
10 Reasons To Buy a Home
10. Sooner or later, the market will clear.
9. There is a lot to choose from.
8. It’s forced savings.
7. It’s risk capital.
6. It offers some inflation protection.
5. You’ll get a better home.
4. It’ll be yours.
3. You’ll save on taxes.
2. Mortgages are cheap.
1. You can get a good deal.
Some might think these voices sounds way too bullish given what most experts are saying about America’s housing rut. They could be wrong. They might only be half-right. But the bull’s side is worth hearing as much as the bear’s.