Housing Values Expected to Recover Faster Than The Economy

Housing values are expected to recover faster than the economy, according to Radar Logic, a firm based in New York. In May, the unemployment rate increased from 9.0% to 9.1%, demonstrating that consumer confidence is still weak and the GDP is not growing. The housing market, however, is expected to slowly stabilize as excess housing is absorbed by new homeowners. Still, it could be years before this happens.

The excess supply of housing is affecting home construction, which has an impact on the economy. Radar Logic says there is a direct correlation between the perceived amount of wealth a family has in their home and the family’s confidence in putting that wealth toward the economy. Corrections in the housing market will be seen clearly as lending trends at banks: when housing improves, it will be a sign that banks think the housing market has hit bottom.

SOURCE: DS News, 6/3/11

URL: http://www.dsnews.com/articles/housing-recovery-to-precede-economic-radar-logic-2011-06-03