The economy fell with the housing market, and it will rise with it as well. Luckily, housing prices have been much improved in the past year.
According to a recent article on Fox Business, home prices have increased by 12 percent in 2013. Economists believe that this is occurring at a healthy pace, and is not moving too quickly for the market to handle.
"This year was the second year of the home price recovery, prices aren't increasing as fast now as they were at the start of the year and that's a good thing—it means they are less likely to get back into bubble territory," Jed Kolko, chief economist at Trulia, told the news source. He added that he estimated prices are still about 4 percent undervalued.
This is good for two reasons. First, rising home values is helping existing homeowners get above water on their mortgages. Many were in the uncomfortable position of owing more than their homes were worth during the worst part of the crisis.
Second, home price increases and the new demand that is causing them has in turn led to a spate of housing construction. As noted by an article on Bloomberg, U.S. housing starts are at their highest levels in five years.
Despite this increase in demand, it is still more difficult to get a loan than before, despite low interest rates. This is, in part, by design, according to Ameriprise Financial chief marketing strategist David Joy.
Strict lending standards will "result in a healthier housing market overall, but it means the recovery is going to be slower."
Lenders must be careful to avoid the situations that led to the last housing crisis. By using risk management software, they will be better able to judge the creditworthiness of those who seek new home loans.