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Close your papers, turn off your TVs, and ignore the talking heads. If you really want to know in which direction housing is headed, talk to the guys on the street; the guys on the front-line; the ones that make the business.
No one knows housing like homebuilders and builders say 2012 will be blowout.
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The housing economy is mending. The combination of low mortgage rates, low downpayment programs, and pent-up demand for homes has buyers out shopping in droves. Demand for new home construction has climbed sharply.
Markets like Washington, D.C. suburb Loudoun County (Virginia) and Bucks County, Pennsylvania mirror other big markets -- new construction is in demand.
It's not surprisingly, therefore, that for the sixth straight month, the National Association of Homebuilders reports homebuilder confidence is on the rise. The Housing Market Index climbed four points to 29 in February, the index's highest reading since May 2007.
The Housing Market Index is now up 8 points since December, its strongest two-month run since June 2003, the month that sparked a 4-year bull market in housing, stocks and commodities.
We're at a similar inflexion point now.
There's a lot of evidence that the housing market is mending. Existing home sales are up. More homes are under contract. Things even "feel different" -- just ask a friend who's shopped for a home this year. You'll hear stories of competing offers and "great homes" that sold in a week.
You didn't hear that stuff six months ago and it's this particular zeitgeist that the National Association of Homebuilders' Housing Market Index attempts to measure.
In its simple, 3-question survey, the NAHB ask its members about their respective businesses, and what they seeing "on the street". The NAHB then compiles those answers into a weighted survey result called the Housing Market Index.
The Housing Market Index questions are :
In February, the nation's builders reported improvement in all three areas. Current home sales climbed 5 points from the month prior; sales expectations for the next 6 months climbed 5 points from the month prior; and buyer foot traffic moved higher again, marking 6 straight months of improvement.
There are now twice as many buyers touring models as there was in September 2011. Clearly, interest in new homes is rising.
The housing market is in an interesting place. The economy is clearly heating up, led by jobs and consumer spending. Meanwhile, there's still stimulus still working its way through the market.
Home prices remain low and so do mortgage rates. Home affordability has never been better. As a result, in many U.S. housing markets, today's buyers have a ground-floor opportunity to buy a home. Lock a long-term rate on an inexpensive home -- it's the ultimate "Buy Low" scenario.
It can't last, of course. And it won't. Builders see what's coming and they're confident for 2012. To buyers it means higher prices, fewer concessions and a tight negotiation. Your best "deals" of the year may be the ones you buy now. In 60 days, it may be too late.
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Dan Green (NMLS #227607) is an active loan officer with Waterstone Mortgage. Email Dan ator click to get a free, no-obligation rate quote.
You can also find Dan on Twitter and Google+.
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