The latest national economic growth numbers should finally put to rest fears of a recession that could choke the real estate recovery now getting underway.
Second quarter Gross Domestic Product (or GDP) came in at an upwardly-revised 3.3 percent — far above the 1.9 percent the federal government had previously estimated.
Key reasons for the robust economic performance: Exports, which have been riding the weak dollar to record levels, and lower imports because the prices of foreign-made goods have been priced higher.
Why should anyone interested in real estate care about GDP? Well, number one, when the economic growth rate accelerates, consumer confidence in the economy rises. That, in turn, pulls potential buyers off the sidelines and opens the door to higher housing sales.
And sure enough, the consumer confidence numbers for August, released last week by the Conference Board, are up by 5 points.
We’re already seeing some impressive jumps in home sales in places that haven’t seen positive news in two to three years — central Florida and even some of the hardest-hit parts of California. According to a new report from the real estate tracking firm, DataQuick, sales in southern California jumped 16.7 percent in July over June, and were 14 percent above the pace of July the year before.
Another encouraging sign: Last week’s mortgage rates dropped to 6.39 percent for 30-year fixed rate loans, according to the Mortgage Bankers Association of America. Fifteen year rates are still just under 6 percent. Applications for loans to buy homes jumped by 6 percent for conventional loans and an impressive 19.9 percent for FHA mortgages.
The federal government’s latest quarterly survey on home prices reveals that the best price appreciation performances are now coming from areas that barely got noticed during the hottest years of the housing boom — markets like Charleston, West Virginia ( up 6 percent for the year), Greenville, South Carolina (up 5.8 percent), Tulsa, Oklahoma (up by nearly 5 percent) and Scranton, Pennsylvania, where values were up by 4.7 percent..
All these markets — and there are dozens more spread through Texas, the Midwest and the South — never experienced the wild days of double digit appreciation.
They offer affordable housing prices and moderate - but steady and slow - price growth. They’re not flashy — never have been, probably never will be — but that’s why they’re still producing positive appreciation numbers, while the boom to bust markets are not.
