Many factors make up the complex, living breathing organism that is the United States economy. For some time, housing has been a downward force on the economy with prices plummeting, construction jobs drying up, and investors placing their money elsewhere. The numbers recently released by the S&P Case-Shiller index show that housing is now a positive force in our nation’s economic healing.
Data released on Tuesday, Jan. 29 showed home prices have risen 4.5 percent in the S&P Case-Shiller 10-City Composite index and 5.5 percent for the 20-City Composite for the 12 months ending November 2012. Boston posted a 2.3 percent increase year-over-year; the month-to-month seasonally adjusted change increased .1 percent. Nineteen of the 20 cities in the composite posted gains; New York was the lone city to post a loss of .3 percent.
I am confident that the housing recovery is here to stay and will prove to be a driving force in our overall economic recovery.
Punxsutawney Phil agrees, it is an early spring in the housing market. The typical lull from mid December to late February has been all but non-existent, as pent up buyer demand held over from the fall market has new inventory spending very little time on the market. Between Dec. 15, 2012 and Jan. 28, 2013 the average days on market has seen a 4.4 percent decrease in Middlesex County year-over-year. In Concord, the decrease is 22 percent year-over-year, Bedford a 67 percent decrease and Lincoln an 80 percent decrease.
The benefits to our local economy will not be just in the direct impact of spending on residential construction, or on things such as furnishings and fixtures. The benefits will also show up in state and local government spending, until recently one of the largest negatives during the recovery. Local government revenue is closely tied to property values through property taxes. The downturn in home values led to layoffs of municipal workers and others around the country.
On a macro level, the economy and the housing market share a symbiotic relationship, one cannot heal without the other. As the recovery in housing gains forward momentum, many sectors of the economy benefit exponentially, especially unemployment.