Some impressive numbers recently came out of Goldman Sachs analysis which project positive things for the housing industry.

Residential investment evidently grew 8.8% in the second quarter of 2014, while now tracking at nearly 15% in the third quarter. This is particularly exciting, as housing start remains 500,000 below historical averages. In the long run, Goldman concludes we are expected to see a "substantial upside" in our housing market.

According to both Goldman and a recent report in Chicago Agent Magazine, however, there are two important developments in the market will need to occur in order to maintain these optimistic long term projections. Here's what you need to know.

1. Housing Affordability

Home prices pushed to double-digit increases in 2012 and 2013, during a period while mortgage rates reversed pace and began rising. While home prices were at record low following the downturn, both frequent homebuyers and investors pushed the home prices to double digit amounts, while wages have not risen to accommodate these amounts.

Consumers continually find themselves priced out of certain areas. The Housing Affordability Index (as developed by the NAR) has declined considerably. The housing inventory that is available is not, in fact, feasible for those with low to middle-class budgets.

What will address housing affordability? The supply of stock and median wages. Unfortunately, agents' hands are tied in this situation. These are two external factors which will have to develop organically.

2. Mortgage Credit Availability

The number of mortgages written are at a six-year high. Unfortunately, lending dollar volume is still at its lowest level since 1993. Chicago Agent Magazine points to credit availability as a key problem in housing recovery, though they do believe lending standards tend to be held at too high an importance.

"There are more important economic trends affecting housing, especially the lagging incomes that we referred to earlier – there’s no doubt that lending standards are tighter than they’ve been in the past, though they have been easing slightly in 2014."

Closely competing measures will have to be intimately watched to see if if lending is improving.

Questions on what this data means in your situation? We'd love to chat! Send us an email or give us a call.