Since the Great Recession ended, the word ‘recovery’ has become synonymous with the housing market. With each slow but steady improvement or gain made and reported on, phrases like “the housing recovery continues” or “the housing recovery has reached a new level” were sure to follow. But after April experienced a new milestone in home sales has the statute of limitations on referring to what is occurring as a ‘recovery’ finally been surpassed?
As MarketWatch reports, the combined rate of existing- and new-home sales broke 6 million in April for the first time in almost a decade. Although it is still far below the 8.5 million pace sales reached in 2005, it is right on par with the average of 6.1 million experienced from 1999 to 2001, which is considered to be a normal market.
In addition, the number of homeowners that are seriously underwater, meaning they owe at least 25 percent more than the market value of the home, has dropped to 6.7 million. While it is still high, it is a far cry from the 12.8 million in 2012.
However, even for homeowners who aren’t in distress, the crisis still weighs heavily on their minds as many underestimate the amount of equity they have in their homes. By undervaluing their homes, they are more reluctant to sell, and a reluctance to sell only works to make an already tight housing inventory even tighter.