Why the housing market Is poised to enter a 'virtuous cycle'

Source: Knowledge@Wharton (University of Pennsylvania)

By the less-demanding standards of the past few years, the latest US housing figures, like many from recent months, look pretty good.

For the 12 months ended July, sales of newly constructed homes were up about 25%. Experts are especially impressed that prices of the least-expensive third of homes lead the gains, going up a full 1% between June and July.

Is this the start of the long-awaited and elusive housing recovery -- one that would bring a stronger economy overall?

"It's for real. This is absolutely for real," says Susan Wachter, professor of real estate at Wharton. The market, she says, is poised to enter a "virtuous cycle" where positive trends will spur more positive trends. "This market recovery will continue," she says, predicting that rising prices will prod potential buyers to buy before prices go up more. That demand will nudge prices up, drawing in even more buyers.

Full Article: Knowledge@Wharton (University of Pennsylvania)

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