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U.S. Housing Market Continues Rebound

Labor, Materials Prices Increase

Written by Brian Hicks
Posted April 25, 2013

For years, many believed the housing market in America would have difficulty coming back from the depths of a rather serious recession. Pay close attention to what’s happening now, however; it's becoming clearer by the day that the market is indeed enjoying a rebound.

house construction sidebarAccording to Reuters, investors are betting on the housing market rebounding even further in the future, hoping to see gains that could potentially bring it back into a true resurgence.

Value in new homes has increased, but that’s not the only side of the story. Volume has also increased recently, putting the housing market in a very good spot for potential growth in both the short and long term.

The crash in the housing market that occurred throughout the last handful of years had a dramatic, lasting effect that seemed to loom overhead for a long time, with little hope in sight for many who were interested in selling their homes. 

With the dramatic uptick happening at the moment, however, it appears as if a great deal of change is happening in a short period of time. Costs for housing are increasing, as are those for materials and building supplies. Housing as a whole, then, is enjoying a renaissance period.

A Trend in Resurgence

If you’ve payed any attention to the housing market as of late, you’ve likely seen an increase in numbers that is difficult to ignore. The Dow Jones U.S. Home Construction Index (NYSE:ITB), for example, is up 14% since the start of the year, and it's grown over 60% from a year ago.

It’s numbers like these that many people didn’t expect to see for a great deal of time, especially given the fact that the market suffered so heavily for so many years.

And this is starting to affect the larger economy. The price of labor is increasing at a dramatic pace, in large part because the labor force is actually quite limited in relation to demand, as Bloomberg reports. 

The cost of building materials has also increased as a result of lowered capacity from the years following the crash. This is further impacting the housing market in a rather strong manner.

The driving factor behind all of this is the fact that demand for housing has dramatically increased over the course of the past year or so, which has had an impact on those who work in the industry. It is likely to continue affecting the housing market for quite some time in the future.

Many people don’t realize how much of an influence builders can have on pricing in the housing market. The ability to slow production is just one way that builders can drive pricing for their labor upwards, which is something that many are currently taking advantage of.

Due to still-slowed production, prices have gone through the roof in comparison to what they were when the market was suffering from a significant slump. It can be easy for some to take advantage of a scenario such as this, but so far things are going as analysts have expected.

Perfect Timing for Investors

From an investment standpoint, there hasn’t been a better time than now to invest in the housing market for quite a while. A recent indication of the steadily improving housing market is the influx of IPOs popping up related to real estate and industrial building materials.

This increase in IPOs is just one reason why many believe the housing market resurgence will continue, and those who are looking to cash in on the scenario need only to choose an investment option that works best for them. 

An increase in the price of land, as well as in the cost of construction, will no doubt have a dramatic effect on the market’s potential in the coming years. After all, there are a lot of factors involved in an improving market, and they are all intertwined. 

Investors looking to jump into the housing market at the right time should start the planning process now, however, as now is as good a time as ever to get involved.

 

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