The housing market has been interesting in 2008 to say the least. The articles written by Builder, Ben Neighbors, President of Neighbors Construction, and posted in January are still available. This article is an assessment of how we faired in our predictions.
The national housing market has been resistive to significant improvements and is still in a period of adjustment. The local market has been healthy, but cautious with the national news. Job growth and the economic outlook for Huntsville is one of the healthist in the nation. Salary.com currently has Huntsville list at their number 2 pick. Reference web link http://www.salary.com/personal/layoutscripts/psnl_articles.asp? . Huntsville has been importing exceptional talent in the engineering field for more than fifty years, the result is a strong economy and balanced economy. Home sales in Huntsville have been moderate which is good news and a significant sign of a healthy economy in the area. Housing starts have slowed in the Huntsville area and prices are flat, pricing escalation associated with the nominal inflation rate appears to be differed for the short term. In the long term, the cost of construction could see a more rapid rate of inflation. This is attributed to continued high energy cost and the threat of inflation. As inflation increase, the cost of mortgages will follow. Pricing is competitive and interest rates are good. Constructing now and taking advantage of historically low interest rates should prove to be a valuable source of wealth for those who take advantage of the current market conditions.
Overall, our assessment of the national and local markets has been accurate with the possible exception of the length of the adjustment. I would have expected to see stronger rebound in the national market and easement of credit availability. In a late July interview with Allen Greenspan, Greenspan gave an interesting assessment of the effect of the subprime mortgage market. He said that 85% of the homeowners who over extended were continuing to make payments without any indication of difficulty. The passage this August of the Housing and Economic Recovery Act of 2008 is expected to help nearly 400,000 home owners with subprime mortgages. A summary of the Recovery act is available on this website. Having reviewed the summary of the act, the act appears to be a good compromise at not rewarding the lenders who made high risk loans while having compassion on the homeowners. At the same time the Act requires a profit split of the equity inflationary gains from the eventual home sale. The Act has provisions for even breaking even and resulting in no cost to the tax payers in the long run.