According to the U.S.Census Bureau, new home sales are surging to their highest point since January of 2008. The recovery from the 2008 financial crisis has been arduous, but indicators are strong for the housing market in the rest of 2016. U.S. corporate profits were on the rise in the first quarter and the median housing price for new homes were at a record high $321,000 in April. Residential investments in homebuilding and renovation are also on pace for a 17% increase over the year.
Despite all this, homeownership rates are at a near 50 year low. One reason could come from student loan debt. A new survey by the National Association of Realtors and American Student Assistance, a financial literacy non-profit, found that 71% of non-homeowners repaying student loans believe their debt is hindering their ability to buy a home. Just over half of all borrowers expect this debt to delay the purchasing of a home for over five years. With over $1.3 trillion in student loan debt affecting some 40 million Americans, this hampers both potential first-time homebuyers and those looking to move up.
After 2008, many investors are still tentative. However, mortgage standards are high, wages are beginning to rise, and foreclosures are returning to their long run averages. This means less turmoil induced by the next cyclical slowdown in the economy and good news for the housing market.
Read more at “The U.S. Housing Market is Starting to Boom” (Matt Phillips, Quartz)