From: Marketplace Economy – Chris Farrell
Now that the fiscal cliff deal has been signed into law, the next round of fiscal fights is already taking shape in Washington. First up, the battle over the debt ceiling, followed by a fight over spending, capped by a budget fight.
But Marketplace Economics Correspondent Chris Farrell says there is one bright economic spot to look forward to: the housing market. Farrel shares his predictions on just what to expect in the coming year.
On the mood of the market:
“You are starting to see increases in prices and that’s feeding a sense that, ‘Hey, interest rates are really low, prices are going up, and I’m noticing that for-sale signs are coming down in my neighborhood, maybe now finally is the time to make a move.’ There seem to be fewer foreclosures in the market, so I think a big part of it is the psychology of the market has changed.
On the economic health of homeowners and buyers:
“The financial obligation debt ratio — this is the number where you take all of your debt payments and you compare it to your disposable income — peaked in 2007. Now, it’s back to the level where it was in the early 1980’s. We are going to be surprised by how many households are out there that actually have the ability to do some borrowing, and they are more credit-worthy. The household balance sheet has been repaired over the past five years.”