Housing ‘normal’ still 2-3 years away – economist

The housing market is showing plenty of strength, from sales and price increases to a decrease in foreclosures.

“There are almost no housing market indicators showing weakness,” says Mark J. Perry, a professor of economics at the University of Michigan-Flint.

Among the recent bright spots:

• Existing-home sales jumped more than 9 percent in 2012, the highest level in five years.
• New-home construction reached a 54-month high in December 2012.
• The delinquency and foreclosure rate is at its lowest level in four years.
• A home remodeling index reached 55 in the first quarter of the 2012, the highest reading since 2004 (readings above 50 indicate a growth in remodeling activity.

Still, the housing market is about 52 percent as strong as it was prior to the 2008 housing crash, according to one housing index by Trulia, which factored in data from the National Association of Realtors, U.S. Census construction, and Lender Processing Services.

The housing market faces challenges, such as the number of homeowners still facing negative equity, inventories of for-sale homes remaining constrained, and mortgage credit remaining tight and preventing some buyers from qualifying for a loan.

“At this pace, ‘normal’ is still two or three years away,” says Jed Kolko, Trulia chief economist.