Despite unfavorable housing data for 2012, market-watchers are saying there are signs of an improving real estate market. Experts from prominent ratings agency Moody’s told reporters this week that even though some indicators are down, optimism is up.
Construction firms are applying for more new permits, and they are being issued at the highest level in several years. Experts say that where previous bumps in the real estate market where fueled by government investment, these positive indicators are market-driven and likely to translate in to long term growth.
Most significantly, an improving job market means foreclosure will likely decline over the course of the next year, as more people are able to continue making payments on their mortgages. At the same time, confidence in new construction and in lending is up.
All of this is good news for investors and developers, who can take advantage of historically low interest rates and new development. Especially in the Detroit area, new construction and renovations to existing properties present an exciting opportunity for individuals and businesses looking for investment properties. However, these transactions can be complex, especially if the purchase is from a tax sale or foreclosed property.
There is still some distress in the market, including decreasing home prices. Foreclosures have increased in some areas, and statistics show that many homeowners still owe more than their properties are worth. Part of the increase in foreclosures is the result of a backlog that built up while banks negotiated with the government over questionable foreclosure practices. The banks and the government reached agreement over a $25 billion settlement.
Source: Washington Post, “Housing experts optimistic, despite dismal data,” Brady Dennis, March 27, 2012.