This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Housing Market Rises Halfway Back to Normal -- With No Bubble In Sight

NEW YORK ( TheStreet) -- The housing market is recovering in fits and starts, but at least there's a number helping peg its progress.

That figure is 54% -- the housing recovery percentage from Trulia.com's (TRLA) rating of the housing market's growth from pre-2008 levels. The housing services firm says the 54% represents the housing market's track "back to normal," with the goal of 100% representing a complete recovery.

Based on Trulia's figures, U.S. homeowners are about halfway there, although there isn't a clear path to recovery for now.

According to Trulia.com analyst Jed Kolko, who penned the firm's most recent Housing Barometer report, the 54% figure is down from 56% in March, suggesting that the housing recovery is losing some of its steam.

What's holding up the recovery these days? Kolko points to a number of issues, prominent among them a fallback in home construction starts -- down 16% from March to April, to 853,000.

The good news is that home sales crept up, and foreclosure rates are at their lowest levels since September 2008. Kolko also says that the drop in home construction starts should be temporary.

"The volatile multifamily sector led the decline, dropping 38% month over month. But building permits -- a leading indicator of future starts -- jumped 14% from March, so starts should bounce back soon. For now, construction starts are just 37% of the way back to normal," Kolko says.

The decline to 54% in the Housing Barometer should be only a one-month deal, meaning homeowners can expect to see there was a rebound in May, he says.

Trulia also reports that the recent housing recovery is no bubble.

According to its Bubble Watch, home prices are actually undervalued by 7%, meaning U.S. home values have room to grow. For some perspective, U.S. home prices were overvalued by 39% in early 2006, before the housing crisis swept the country.

"Home prices fell so much after the last bubble burst that they still remain below normal levels even as prices rise sharply today," he says. "Several forces are waiting in the wings that should slow down today's rapid price gains before they rise into bubble territory again. More inventory, higher mortgage rates and fading investor activity would each take home-price gains down a notch."

So it's slow going for the U.S. housing market right now -- but at least it's moving in the right direction.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
TRLA $48.36 3.14%
AAPL $126.00 0.00%
FB $87.55 0.00%
GOOG $522.86 0.00%
TSLA $279.72 0.00%

Markets

DOW 17,683.58 -46.53 -0.26%
S&P 500 2,068.76 -8.02 -0.39%
NASDAQ 4,991.94 -17.2740 -0.34%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs