Improved employment figures and record home affordability levels could spawn a minor housing recovery this year, analyst Mark Fleming said Wednesday in the CoreLogic MarketPulse report.
Fleming says economic concerns peaked in the summer of 2011 when politicians were stuck wrangling over the nation's debt ceiling and the economy seemed poised for stagnation.
Fast-forward a few months, and Fleming says conditions are better, making way for a possible recovery in 2012. Fleming's more optimistic outlook is mirrored in the Freddie Mac U.S. Economic and Housing Market Outlook survey for the month of January.
The Freddie report says economic growth will strengthen by 2.1% in the first quarter of 2012, while mortgage rates will remain low at least through the beginning of the year. In addition, the Freddie Mac survey predicts home sales will grow another 2% to 5% from 2011.
Fleming with CoreLogic says several other developments could spur along housing demand. One of those being the number of households paying off debts — a factor that creates more liquidity and access to credit.
Furthermore, households started adding home equity lines of credit in the third quarter of 2011, bringing in more access to cash flow and suggesting borrowers and lenders are more confident.
He believes 2012 is the right time for a housing price rebound with affordability levels putting a floor on the market, barring further price declines.
With this in mind, Fleming said analysts will be watching the market closely in search of positive signs during the spring and summer selling seasons.
His report noted that "most housing statistics basically moved sideways in the latter part of 2011. Builder sentiment is improving ever so slowly, but remains at very low levels. Housing starts are also increasing, driven mostly by multifamily starts."
Fleming points out that single-family housing starts and permits increased at an annual pace of 15% at the end of 2011. Meanwhile existing home sales trended upward, rising 12% when comparing November 2011 to January.