Housing contributes to economic activity in two ways. First, when folks invest money to build or buy homes. Second, when they spend money on utilities, rent, appliances, landscaping, and other housing services. The first contributes about 5% to GDP and the second about 12%, for a total of approximately 17% – which is quite a bit. So housing is a really important driver for the American economy.
Many analysts would say that the Boise real estate market is the most important factor in looking at the local economy, and that can be said for the national economy as well. When people have more equity they tend to spend more money.
Briefly, the housing market hangs on the following indicators:
Employment. Sort of obvious, isn’t it? Without jobs, people cannot take out loans to buy homes so housing demand drops, and home prices either stagnate or dip (as they have done since June 2006). So we must see meaningful job creation before a recovery in housing.
Home Loans. When analyzed for the exclusion of refinances, the new home loans are a great indicator of buyer confidence and viability. If they cannot get access to money, or willfully refuse to, the numbers will negatively reflect that.
Supply. The market dictates what the consumer can purchase and if there is not much of a certain product on the market, prices tend to go up. As supply increases prices tend to decrease.
When you look at how many homes are being held by the banks as REO property, the recovery may take several years.
Price Trends: Watch housing prices for signs of strength of weakness. Rising prices bode well. Falling prices typically suggest economic weakness.
Building permit numbers. As builders watch the market supply and economic indicators, they choose to either build, or wait. Depending on what they are doing shows you what they know.
Building costs. A substantial majority of the lumber produced or sold in the nation makes it’s way into home construction. Whenever demand increases, prices also increase so watch for increase lumber prices to know what the Boise real estate market is doing.
Now that you know the basics you can watch out for the previously mentioned price influences. If you notice one of them changing, a quick look at the others may show you a great time to purchase real estate and reap appreciation.
The author enjoys writing articles about boise homes and
