It seems like the North Puget Sound real estate market may have finally turned the corner. In the Pacific Northwest, buyers are finally taking to the streets in search of a home. This area showed a ten percent increase in the number of homes sold in May 2012 over the previous year.
The marked increase in home purchases is even more surprising when we consider the source: investors. Buyers are purchasing homes because they want to rent out the property for investment income. This change in the marketplace is a sign that investor sentiment is up and the real estate market is in recovery mode.
Since 2006, the fraction of vacant homes on the marketplace is at its lowest level. As home purchases grew in early 2012, builders were drawn to the real estate market to meet additional demand for home. Compared to May of 2011, builders worked on 26 percent more homes than in May of 2012.
With all the leaps and bound made by the real estate market, the overall economy is still disappointing. In the first quarter of 2012, the gross domestic product grew by 1.9 percent. Out of this anemic growth, the real estate market accounted for 0.4 percentage points. This shows that despite the struggling economy, the real estate market is gaining momentum once again.
Still More Recovery to Go
Despite all of the recent gains, the Federal Reserve has still had to step in to prop up the real estate market. The amount of equity in homes is at just $2 trillion which marks a 25 percent decrease from 2002. Out of four borrowers, one debtor will actually owe more on their home than what it is worth. In response, the Fed has helped banks to push home loans down to less than four percent in an attempt to encourage real estate purchases.
A Positive Outlook
The North Puget Sound is not out of the tunnel yet, but it is getting there. Reports from May show an increasingly bright future for the real estate market. As builders start making homes once again, the housing bust appears to be officially over.