Will Housing Growth Drive The Economy In 2013?

The housing market may be the engine of this year’s economic growth, according to some economists surveyed by CNNMoney. Four factors may contribute to a 2.4% growth in the economy:

Fewer Foreclosures

The decline in foreclosures may go a long way to restore confidence in the housing sector. Once buyers see fewer homes on the REO and foreclosure market, they may realize that housing prices are on the rebound and decide that now is the time to get the lowest price possible.

Rising Prices

Closely related to fewer foreclosures, an increase in prices will signal to bargain hunters that they could miss their window of opportunity if they delay their purchase. But rising prices could also mean an increase in property values for homeowners who have endured an erosion of their equity in the past few years.

Consumer Confidence

As homeowners experience a rise in the property values, confidence in the economy may return. And with confidence comes spending.  Some economists are predicting an uptick in revenues for housing related industries as consumer confidence returns and homeowners decide to remodel or update appliances.

Building Boom

A slowdown in construction has been the bane of the recession, but as the economy improves some economists predict that housing starts will increase.  The biggest driver of the coming construction boom is that developers will need to build more properties just to keep up with demand.

While many economists predict a major turnaround in housing for 2013, it’s important to understand that each city and state will see different results. If you’re living in an area hit hard by the housing bust, expect the turnaround to take a little longer.