After taking the largest hit since the Great Depression, the U.S. housing market is definitely reviving after the financial crisis of a few years ago. In fact, it is now more than halfway "back to normal" according to housing data website Trulia.com.
With upwardly trending sales and rapidly rising prices, increasing housing starts and falling foreclosure rates, the housing market is 56 percent back to normal, says Trulia, compared with the low point of the mortgage meltdown and the pre-bubble levels. Last year, housing was only one-third back to normal.
"Real estate is back after five to seven years and the way to approach the market has completely changed," said Trulia's consumer spokesperson Michael Corbett in a statement.
And it looks like consumers agree with Trulia's assessment, believing the market to be in an upswing. Some 75 percent of Americans believe that now is a better time to buy a home than it will be in a year because of rising prices. And only 32 percent think now is a better time to sell than in a year. That attitude is definitely reflected in total inventory, now at its lowest point in 12 years. Sellers are hesitant to put their homes on the market, hoping to time it just right for the best prices.
"The unwillingness to sell is a bit surprising based on the hard facts of many markets that make it an excellent time to sell now," said Daren Blomquist, vice president at housing market research company RealtyTrac. "It's human nature to want to sell at the very top of the market and buy at the very bottom."
And while the housing and mortgage markets are likely to improve over the next year, there is a chance the growth could take place at a slower pace. New homes sales are increasing and housing starts are rising, but builders are finding a limited stock of materials, land and labor, resulting in higher costs for all three. The difficulties may mean fewer housing starts throughout the rest of the year.
Another reason it may take awhile to get the market back to 100 percent is the persistence of restrictive mortgage credit standards. Demand for housing is strong, but most well-qualified buyers have already been approved for loans, while those with less-than-excellent credit are still finding it difficult to secure funding.
And of course, mortgage interest rates could start to work their way back up during the course of the next year. Long-term loan rates have been in the 3 percent range for many months now, record- breaking lows for the history of the U.S. housing market. Still an increase in rates, even from historically rock-bottom rates, could discourage some potential buyers and refinancers from entering the market.
Yet even though progress may slow, it is very likely to make significant headway in the next year. Trulia says there is no reason rush out and buy or sell like crazy at this point.
"As prices rise in 2013, buyers are impatient while would-be sellers are holding back," said Trulia chief economist Jed Kolko in a statement. "Faced with limited inventory, many buyers will feel pressure to act fast - but snap decisions often end in regrets. Homeowners' biggest regrets are wishing they bought a bigger home and wishing they remodeled more. Many buyers would have fewer regrets if they waited until they were in strong enough financial shape to afford a house that really meets their needs."