5 essential factors in a housing recovery

United States, 16th July: Do you know that a healthy housing market is the key to a healthy economy of any nation?

And since housing happens to be the biggest investment and expenditure to be made by any person, hence it needs careful decision making. It is likely to assume great significance even in the times to come. 

The truth is that investment, personal expenditure, and overall activities of any economy are ultimately based on the sound health of 
housing. 

So, let’s watch out five vital factors to help in housing recovery------------

1. Growth of jobs—Jobs help the economy grow higher. The more the number of jobs in the economy, the more will be spending power of people living there which will ultimately trigger the housing market of the economy. On the contrary, lesser number of jobs will result in higher rate of jobless people resulting in stagnation of prices in the housing market. Also, people are not ready to move to the places which have no jobs. Those already living there show their reluctance to get mortgage loans for buying a house.

2. Housing inventory—Housing inventory is yet another factor influencing the housing recovery in any economy. The less the backlog of supply of houses to be sold, the higher will be the price offered for your house. Hence, all investors must keep a close vigil on housing inventory.

3. Mortgage lending--- Mortgage lending activity influences the housing recovery to a great extent. Majority of people are unable to buy house if they can’t get a mortgage loan. As per Mortgage Bankers Association, there has been a fall of 19 percent in the mortgage applications in America last week witnessing a marked fall in refinancing. Hence, there is a need for a revival in mortgage lending activity which will help in boosting confidence in the US economy.

4. Construction activity and housing prices--- There is a need to keep a watch on housing prices along with construction operations in the economy. Poor construction activity will be seen as a sign of poor future economic results while new house construction is considered vital in creation of new jobs and ultimately growth in the economy.

5. Lumber prices—Increase in lumber prices is considered as a positive sign for the recovery in the housing market in the following two-four month period. This is due to the fact that firstly, about 88 percent of total lumber demand in the US is consumed by housing and secondly, those who use and manufacture lumber ultimately control the US lumber market.