Is Another Housing Boom On The Way?

Mortgage rates are still at rock-bottom levels, and will stay there for the foreseeable future. The total number of foreclosures are down. Home prices and the number of new home sales are up. Is this glimmer of recovery in the housing market a signal of a larger housing boom about to happen? Barclays Capital is predicting that housing prices will reach peak levels by 2015 – just two years away. Barclays analyst Stephen Kim explains, "In our view, the housing market had undergone a dramatic over-correction during the prior five years, resulting in pent-up demand for housing purchases that would spark a rapid rise in housing starts.” Kim is also expecting a rise in home prices from 5-7.5% a year. Beyond that, experts are anticipating new home construction to increase by 20% a year for the coming couple of years, which in turn will have a trickle down effect on other sectors, such as construction materials to paint, flooring and fixtures.

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