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More homes built in 2012?

By: 24 December 2011 No Comment

First off – merry Christmas to all and a happy new year. The past few years have been challenging for all involved in the Arkansas real estate industry, so here’s hoping things look up for home buyers, home sellers, builders, mortgage bankers, real estate agents and everyone else with a vested interest in market performance.

And, it appears we may see some improvement in 2012, if a report from Fitch Ratings is accurate. Before getting into that, it’s important to answer a question – what kind of organization is Fitch Ratings and what gives that group any credibility when it comes to predicting economic trends?

Fitch Ratings is an international credit rating group that is international and has offices in New York and London. The group – along with Moody’s and Standard & Poor’s – is one of the top three credit rating agencies in the world and is in the business of determining how risky investments are.

Assuming Fitch Ratings is on the mark with regard to the housing industry next year, builders will be slightly busier in 2012 – good news for an industry that has been in decline for at least the past four years. Specifically, the group projects a 6.7 percent growth in housing starts and 5.6 percent growth in new homes sales.

But, wait – there’s more. The group forecasts 3 percent growth in existing homes sales next year and a 4 percent increase in home improvement spending. Fitch Ratings also predicts 4 percent growth in commercial construction spending.

We’re not talking about huge gains in any of the areas referenced by Fitch Ratings, but slight growth is an improvement to what’s become common over the past few years, isn’t it? It’s good news when people are out building things as that means jobs are created, inventory is sold by merchants who have watched their businesses decline like everyone else, money circulates through the economy, etc. When we hear about the possibility of slight growth, the immediate impacts are obvious when we think about them and there’s always the hope that we’re looking at a trend that will continue through 2013.

Of course, the Fitch Ratings report isn’t all rosy. No, the group expects that public construction will remain flat next year as projects financed with federal stimulus money from 2009 programs continue to be completed. That part of the forecast should come as no surprise – communities around Arkansas have seen more than a few new, shiny buildings paid for with federal money pop up over the past couple of years and that level of construction can’t continue forever.

While we’ve seen more than a few economic forecasts that have been proven completely wrong in this economy which seems to wander unpredictably, it’s good to see a decidedly neutral group like Fitch Ratings forecast improvements that are in reason. Here’s hoping the company is right and we do see some improvement – however slight – in real estate markets next year.

Home Sweet Home is written by Ethan C. Nobles and is sent weekly to publications throughout the Natural State on behalf of the Mortgage Bankers Association of Arkansas.

About: Ethan C. Nobles:
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.

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