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We all know that one of the key factors in the downturn of the economy was due to the housing industry.  Real estate has always been an important part of any economic stability and we are still facing uncertainty as we head into a new year.  Yet there are some positive signs that the housing market is turning the corner.  Some of the hottest markets during the boom, such as California, Nevada and Florida, are once again starting to experience gains in home sales.  The reason is increased affordability.

Here is another good article on this subject:

"Existing single-family home prices have come down an average 20 to 30 percent in these hard-hit boom markets in the 12 months preceding September, 2008.  That price moderation has provided a compelling incentive to buy for households who have been sitting on the fence for the last two years.

The federal government has also helped with its long-sought increase in the conforming and FHA loan limits and the enactment of the $7,500 first-time homebuyer tax credit.

Even if the economy stays in the doldrums, it is likely that existing-home sales will remain on an upward trajectory.  New-home sales will continue to struggle because of the inventory overhang.

During the 2001-2003 downturn, the economy shed some 2 million jobs, yet existing-home sales rose from 5.2 million to 6.2 million units.  The fact is, home sales can improve even in a recession if affordability improves.  After all, even in a deep recession, around 93% of the workforce will retain their jobs.

Home sales have historically been the powerhouse for pushing our economy back into growth mode after a downturn.  Given the signs that improving affordability conditions are starting to drive home sale gains, the signs are good that home sales will spur the next economic recovery."

Courtesy of Lawrence Yun, Economist