Bloomberg is perhaps being to dour:
HOUSING’S ANEMIC REBOUND TO GIVE LITTLE BOOST TO U.S. ECONOMY
Jan. 12 (Bloomberg) — This may be the year the U.S. housing market starts crawling up from rock bottom. Held back by foreclosures, the pace will be so weak it won’t do much for economic growth.
Home prices probably will start to gain in 2011′s third quarter and rise 0.6 percent for the year, the first annual advance since 2006, according to Fannie Mae, the largest U.S. mortgage buyer. Real residential investment, an inflation-adjusted measure of homebuilding, will increase 9.6 percent in 2011 after five years of declines to a record low, based on the median forecast of 30 economists at a Federal Reserve Bank of Chicago symposium last month.
Real residential investment is at a record low? I think I knew that! Anyway, put that dearth in residential investment alongside another notable fact: for the past three years household formation-the most important determinant of housing demand, by far-has been running nearly one million units below its typical 1.3-million long-term annual rate. Which is to say, once the economy and employment get back on track, sizable pent-up demand will meet crimped supply. I don’t see why that doesn’t add up to a new housing mini-boom sooner than most people think. . . . . P.S. And don’t complain that foreclosures are crushing the market. Many of them are being snapped up by a wave of investors who can rent them out for a profit. . .