5 Key Questions About This Housing Recovery

Ahead of the busy spring months for home sales, it's safe to say the housing market is more stable than it's been in years--and some see it heating up even more as winter ends.

Still, there are some creaky foundations underneath this real estate recovery, despite stories of bidding wars in some places and buy-now-or-miss-the-boom talk from real-estate agents.

Housing data is strengthening and many economists predict the trend will continue, albeit at a modest pace. A U.S. Commerce Department report Thursday showed homebuilding rising at the fastest rate since the summer of 2008. Earlier this month, the widely watched Case-Shiller home price index showed that U.S. home prices rebounded 4.3 percent for the year just ended.

"Prices are starting to bounce back from a very low level and it's pretty safe to say we have hit bottom," says Tim Courtney, chief investment officer Exencial Wealth Advisors in Oklahoma City. "It's a still a slight recovery from a very painful downturn and I would not say it's raging 'buy.' But I would say it's a relatively good time to buy real estate."

Any sign of improvement is welcome, as many economists note that a real recovery in everything from consumer spending to unemployment is difficult when housing is still on its heels. Still, risks remain in a housing market that has gone through a huge trauma. Here are some of the biggest questions behind the "For Sale" signs:

1. How affordable is housing? By some measures, homes prices are a steal right now. The Housing Affordability Index shows that homes are cheaper than they have ever been, according to the National Association of Realtors. The index might be deceptive, though, because it figures only the average salaries compared with home prices and financing costs. With interest rates near all-time lows and rents rising steadily, the reduced cost of mortgages would seem to be an easy option. So why aren't more people taking that route? Credit checks disqualify many potential buyers, and the no-money-down loans of the past have disappeared. Add in a 10 to 20 percent down payment, and affordability becomes more of a challenge.

[Read: The 3 Best (and Worst) Real Estate Sectors.]

"For a lot people living between the coasts, people are not doing great financially and don't have the kind of job security to feel confident to take on the kind of debt needed to buy a home," says Kevin Finkel of Resource Real Estate, which manages distressed real estate assets. "For the other 25 percent, things look better and better."

2. Have financial markets gone too far in buying into the housing recovery? Real estate investment trusts (REITs) have boomed over the past three years, outperforming almost every other financial asset. Even the biggest proponents of REITs say the best gains have already been made. The same can be said of homebuilder stocks. These investment gains may be built on an overly rosy view of the future. Still, REITs should generate higher total returns than bonds, and probably with slightly less risk because they tend to do well as inflation rises, according to housing investment analysts. Bonds lose value to inflation.

For those who want to roll back the clock and find bargains, the housing market in Europe is probably a year or more behind the U.S. recovery. Courtney says Dimensional Fund Advisors (DFA) and Vanguard both offer international real estate funds that should yield more than twice the 3 percent average yield of U.S. REITs.

3. Why does real estate always look greener somewhere else? It's not all in your head. Housing remains an uneven market, and some parts of the nation have been left behind in the recovery. What's more, there are cities in each part of the country that have managed to hold up better than the rest of their region.

Such geographic differences in real estate markets are not new, of course, but they appear to be widening, partly because the early 2000s saw speculative excesses and overbuilding that still weigh on states like Florida and other Sun Belt markets, says Finkel. But it also reflects a long-term trend in the economy in which quality jobs cluster around the cities, university towns, and urban suburbs. Those places attract better-educated and more-nimble workers in a global economy. "They tend to be in cities like New York, Washington, San Francisco, and Los Angeles. Those real estate markets are good."

[Read: For Real Estate Investors, Time to Scout New Locations.]

4. If you really want to buy, where are the bargains? On paper, it's not hard to find apartments and other real estate that appears to have a positive cash flow. Some people have been putting cash into foreclosed properties that have been underpriced, although it's a difficult science requiring money, patience, and careful analysis. Banks still own some $30 billion of foreclosed properties, but in many areas, the much-touted foreclosure market is picked over and probably not the best place for non-professionals to find deals, says Andrew Gorczyk, a portfolio manager at Signature. Still, for wealthier investors, there may be opportunities including what Gorczyk calls "country club investments," in which a group of buyers scout properties and chip in $10,000 to $50,000 for apartments or other income-producing properties and private equity funds.

5. Should homeownership be part of your financial plans? An entire generation entering the working world is facing bleaker job prospects than any time since the FDR-era Depression. Says Finkel: "We may have reached a plateau in the single-family home market. Young people are not buying." But there is no clear evidence to prove that the rent-not-buy trend will stick. To be sure, renters have been reluctant to put their savings at risk by purchasing homes. But they are also unnerved by rising rents, says Gorczyk. Some worry that prices may rise to unaffordable levels and they will be locked out forever. But there appears to be no reason to have "buyers' panic." Prices appear to be rising slowly and steadily, in line with the long-term trend.

[Read: 10 Ways Your Home Can Pay You Money.]

Another reason to own a home, beyond simply having a place to go at the end of the day, is to provide "a measure of inflation protection," Courtney says. But "if you own a home already, there is no strong reason to add more real estate investments to your portfolio."

More broadly, the modest recovery is small consolation for the millions stuck in homes they bought over the past decade that are now worth less than they paid. The recovery is bestowing its gains unevenly--but more rationally--than in the past, which could warm the hearths of homeowners and real estate investors going forward.

"It's still the American Dream," says Gorczyk. "There was a lot of misery during the housing collapse, but most individuals and investors forget those negative things pretty quickly."

More From US News & World Report


Get stories like this on the Yahoo app and discover more every day.
Download it now.
  • European equities slide in choppy trade
    European equities slide in choppy trade AFP News - 8 minutes ago

    European stocks slid Thursday in choppy trade as investors eyed poor German data and recent oil price falls, on the eve of a speech by Federal Reserve boss Janet Yellen. In late morning deals, Frankfurt sank 1.0 percent, London lost 0.3 percent and … More »

  • Michaels meets 2Q profit forecasts Associated Press - 9 minutes ago

    On a per-share basis, the Irving, Texas-based company said it had net income of 17 cents. The results met Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research ... … More »

  • Turkey sends more tanks to Syria, warns Kurdish militia
    Turkey sends more tanks to Syria, warns Kurdish militia AFP News - 19 minutes ago

    Turkey on Tuesday sent more tanks into Syria and sternly warned a Kurdish militia to withdraw from frontline positions, a day after pro-Ankara Syrian opposition fighters captured a key border town from jihadists. The tanks joined those which … More »

  • Brexit hits German business morale, Ifo index plunges
    Brexit hits German business morale, Ifo index plunges Reuters - 20 minutes ago

    The Munich-based Ifo economic institute said its business climate index, based on a monthly survey of some 7,000 firms, fell to 106.2 in August from 108.3 in July. "Business confidence in Germany has clearly worsened," Ifo head Clemens Fuest said … More »

  • Global stocks wilt ahead of Fed gathering, dollar wobbles Reuters - 27 minutes ago

    European stocks saw their biggest fall in three weeks on Thursday and currency markets were noticeably subdued as investors took to sidelines ahead of one of the big global central banker gatherings of the year. Japanese and Chinese stocks had … More »

  • 'Bogan', 'ranga', 'rurosexual' added to Australian dictionary
    'Bogan', 'ranga', 'rurosexual' added to Australian dictionary AFP News - 29 minutes ago

    Heading Down Under where locals are "dry as a dead dingo's donger" and beachgoers don "budgie smugglers", but unsure what this means? The second edition of the Australian National Dictionary -- a heavy two-tome hardback containing the definitions … More »

  • Gold holds above four-week low, awaits clues on Fed rate hike
    Gold holds above four-week low, awaits clues on Fed rate hike Reuters - 34 minutes ago

    Yellen is scheduled to address a meeting of central bankers in Jackson Hole, Wyoming, on Friday, and recent comments from Fed policymakers have raised investors' expectations that she might adopt a less cautious tone on rates. "Investors are … More »

  • Medtronic tops 1Q profit forecasts Associated Press - 34 minutes ago

    The Dublin-based company said it had profit of 66 cents per share. Earnings, adjusted for one-time gains and costs, came to $1.03 per share. The results beat Wall Street expectations. The average estimate ... … More »

  • Oil prices fall as hopes of production freeze fade
    Oil prices fall as hopes of production freeze fade Reuters - 35 minutes ago

    Oil prices slipped on Thursday as the market focused on oversupply and fading hopes of a production freeze. U.S. light crude oil was down 5 cents at $46.72 a barrel, after dropping 2.8 percent on Wednesday. Oil prices rose more than 20 percent in … More »

  • South Korea offers Tokyo-funded money to 'comfort women'
    South Korea offers Tokyo-funded money to 'comfort women' AFP News - 36 minutes ago

    South Korea said Thursday it will offer each surviving victim of Japan's wartime sexual enslavement 100 million won (US$89,581) using funds provided by Tokyo, an offer quickly rejected by some of the women. The plight of the so-called "comfort … More »

  • This Philippines bitcoin firm has acquired a defunct Silicon Valley company
    This Philippines bitcoin firm has acquired a defunct Silicon Valley company e27 - 42 minutes ago

     The makers of Rebit.ph, Bitbit.cash, and PrepaidBitcoin.ph now have a partner in the world’s biggest tech ecoystem What kind of company would be magnanimous — or foolhardy — enough to pull another company out from the grave? Philippines-based … More »

  • Chinese telecom firm ZTE books 9.3 percent rise in first half profit on 4G growth
    Chinese telecom firm ZTE books 9.3 percent rise in first half profit on 4G growth Reuters - 47 minutes ago

    Chinese telecom equipment maker ZTE Corp on Thursday booked a 9.3 percent rise in first-half net profit as China's adoption of fourth-generation (4G) mobile technology offset the impact of restrictions on its U.S. operations. Profit reached 1.8 … More »

  • Malaysia's AirAsia values leasing unit at $1 bln -analyst presentation Reuters - 53 minutes ago

    AirAsia Bhd, Asia's biggest low-cost airline, values its wholly owned leasing arm at 4.1 billion ringgit ($1 billion), and aims to attract an equity investor to the unit by end-2016, it said in a presentation to analysts. The Malaysian airline aims … More »

  • Europe Stocks Snap Three-Day Winning Streak as All Await Yellen Bloomberg - 57 minutes ago

    The Stoxx Europe 600 Index slid 0.8 percent to 342.24 at 11:27 a.m. in London, with almost all industry groups falling. Germany’s equity benchmark DAX Index fell 0.9 percent, for the biggest decline among major western-European markets, as a report … More »

  • Chinese telecom firm ZTE books 9.3 percent rise in H1 profit on 4G growth
    Chinese telecom firm ZTE books 9.3 percent rise in H1 profit on 4G growth Reuters - 1 hour 2 minutes ago

    Chinese telecom equipment maker ZTE Corp on Thursday booked a 9.3 percent rise in first-half net profit as China's adoption of fourth-generation (4G) mobile technology offset the impact of restrictions on its U.S. operations. Profit reached 1.8 … More »

  • SE Asia Stocks-Indonesia gains; market subdued ahead of Yellen speech Reuters - 1 hour 3 minutes ago

    Aug 25 (Reuters) - Indonesian shares gained nearly 1 percent on Thursday while other markets in the region were largely lacklustre as investors awaited cues on U.S. interest rates from Federal Reserve ... … More »

  • London mayor criticises burkini ban before Paris visit
    London mayor criticises burkini ban before Paris visit AFP News - 1 hour 10 minutes ago

    London Mayor Sadiq Khan spoke out against the banning of the Islamic burkini swimsuit in France as he headed to Paris Thursday for talks with his French counterpart. It's as simple as that," he told the London Evening Standard newspaper. Khan is … More »

  • Investor group rebukes Sports Direct, wants review of management Reuters - 1 hour 10 minutes ago

    An investor group whose members manage 850 billion pounds of UK equities has taken the unusual step of publicly rebuking the management of Sports Direct and calling for an independent review. The Investor Forum, which speaks for some 12 percent of … More »

  • Russia frees Japanese man held on disputed Kunashir island
    Russia frees Japanese man held on disputed Kunashir island AFP News - 1 hour 19 minutes ago

    Russia has released a Japanese citizen detained on a disputed island claimed by both countries, Tokyo's foreign ministry said Thursday, ahead of diplomatic talks on the long-running territorial dispute. Tokyo and Moscow are working to resolve … More »

  • Malaysian (and ASEAN) banks need to step up their digital game plan
    Malaysian (and ASEAN) banks need to step up their digital game plan e27 - 1 hour 23 minutes ago

    To fully embrace the digital scene, banks need to be more open in terms of working with key players to push local business into adapting the competitive environment Digitalisation is taking the global economy by storm, Malaysia and the rest of the … More »

  • Maybank Posts Third Straight Profit Drop on Loan Impairments (2) Bloomberg - 1 hour 32 minutes ago

    Net income fell to 1.16 billion ringgit ($288 million) in the three months through June from 1.58 billion ringgit a year earlier, the Kuala Lumpur-based company said in a stock exchange filing on Thursday. Maybank reiterated its “vigilance” over … More »

  • RTL revenues slide as FremantleMedia disappoints
    RTL revenues slide as FremantleMedia disappoints Reuters - 1 hour 33 minutes ago

    European broadcast group RTL reported a 2 percent decline in sales in the second quarter due to lower revenues at production unit FremantleMedia and competition for advertising revenue from the UEFA European soccer championship. The result missed … More »

  • Chinese envoy tells Australian PM to fight 'protectionism' together - ABC Reuters - 1 hour 35 minutes ago

    China's ambassador told Prime Minister Malcolm Turnbull that their countries should fight protectionism together during a meeting a week after two Chinese firms were blocked from buying a stake in Australia's biggest power grid, broadcaster ABC … More »

  • European Stocks Retreat as Dollar Rally Fades Before Yellen Bloomberg - 1 hour 50 minutes ago

    Equity markets retreated in Europe as an unexpected drop in German business sentiment signaled companies remained cautious after Britain’s decision to quit the European Union. Iron ore fell on the prospect of shrinking steel production in China and … More »

  • FTSE retreats as pharma stocks fall Reuters - 2 hours 14 minutes ago

    By Kit Rees LONDON (Reuters) - UK shares fell on Thursday, extending losses from the previous session as healthcare stocks dropped, though CRH (CRH.L) rose after posting results. The blue-chip FTSE 100 ... … More »

Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
to view quotes in your portfolios.


  • Most Actives
    Most Actives
    NamePriceChange% Chg
  • % Gainers
    % Gainers
    NamePriceChange% Chg
  • % Losers
    % Losers
    NamePriceChange% Chg

Market Data

  • Currencies
    NamePriceChange% Chg
  • Commodities
    NamePriceChange% Chg
  • Bonds
    TreasuryYield (%)Yield Change