Confidence among U.S. homebuilders rebounded this month, reflecting improved sales trends during the spring home-selling season and the strongest outlook for sales over the next six months in more than six years.

The National Association of Home Builders/Wells Fargo builder sentiment index climbed to 44 this month from 41 in April. It was the first increase since December.

Measures of customer traffic and current sales conditions also improved from April’s reading.

Readings below 50 suggest negative sentiment about the housing market. The last time the index was at 50 or higher was in April 2006.

Concerns over rising costs for land, building materials and labor have dimmed builders’ confidence in recent months.

Regardless, steady job creation, near record-low mortgage rates and rising home values have spurred sales this year.

Home flippers got a bad name during the housing boom. They sold properties for big profits in days or weeks, and the rapid price appreciation created a frenzy that led to the eventual bust.

But today’s flippers are getting credit for helping the market recover. They’re taking time to add value, sprucing up the landscaping and putting in new floors and appliances.

“When I put a house back up for sale, it usually goes very quickly,” said Bruno Duarte, a 34-year-old former stock broker.

“Prices since last year have risen a lot,” he said. “Houses I used to buy for $70,000 or $75,000 cost $80,000 now. They’re costing a little more to buy, but they’re also selling for higher prices, too.”

The best areas for flips are those where prices fell the most, industry observers say. In South Florida, for example, values tumbled by about half before hitting bottom in 2012. That year, flipped homes in the metro area of Palm Beach, Broward and Miami-Dade counties had an average 37 percent gross profit, according to a recent study by RealtyTrac Inc. The firm counted a flip as a sale that occurred within six months of the previous transaction.

In many cases, flippers are paying cash for dilapidated properties that other buyers won’t touch or can’t get a lender to finance, said Daren Blomquist, a spokesman for RealtyTrac.

“There will always be some bad players, but overall, flippers seem like they’re filling a necessary gap in the market,” he said.

Although investors are enjoying robust returns, one problem these days is a lack of homes for sale.

Many owners are holding off until prices rise, or they can’t sell because they’re “underwater,” owing more than the house is worth. Also, large investment funds have swooped into some markets and are buying foreclosed homes in bulk, depleting already-thin inventories.

Lex Levinrad, founder of the Boca Raton, Fla.-based Distressed Real Estate Institute, said individual investors looking for homes to buy should target short sales rather than bank-owned homes.

In a short sale, the homeowner needs the bank’s permission to sell for less than the loan amount. To find delinquent homeowners in need of a short sale, investors can search public records or team with an experienced real estate agent, he said.

“Short sales are easier than foreclosures because there’s not as much competition,” said Levinrad, who trains investors. “Some of the best deals are short sales, hands down.”

NEW YORK (CNNMoney) – Consider this one more sign that the housing market is heating up: Appraisers are putting higher values on homes again, allowing for more deals to go through.

During the housing bust, sales were often derailed by low-ball appraisals that fell far shy of a home’s selling price.

For example, if a home cost $500,000 and required a 20% down payment of $100,000, the buyer would need to finance $400,000. But if the appraiser valued the home at $450,000, the buyer would only be eligible for a $360,000 loan — making the home too costly for some buyers.

But now, as home prices climb and housing inventories shrink, appraisers are valuing homes at or above their selling prices, according to Lawrence Yun, chief economist for the National Association of Realtors.

Between 2008 and 2010, appraisals for more than a third of Seattle-based real estate agent Michael Ackerman’s sales came in below the selling price. So he had to get creative.

“I started pulling out the key boxes at the homes so the appraisers couldn’t get in,” said Ackerman. “They had to call me to let them see the home. I would bring a packet of comparables along and explain what I used to price the home.”

But now, with home prices posting such strong gains, those strategies may not be necessary anymore.

“I’ve closed 15 homes so far this year and none of the appraisals have come in below the selling price,” said Ackerman.

He was certain a recent deal in Wallingford, Wash. was going to fall through when the buyer agreed to pay $755,000 — well above the average $690,000 other homes in the area had sold for. When the appraisal came in at the full selling price “everybody’s jaws dropped,” he said.

And in some of the hottest markets, appraisals are coming in well above the selling price.

Agent Eric Tan said one appraiser did a “drive-by” of a West Covina, Calif., home he was selling in April.

“He didn’t ask for any comps, to see the inside of the house, or even schedule a time to meet with me. He wrote up the appraisal right at the purchase price,” he said. “I was able to sell the client’s home for about $40,000 more than I thought the appraiser would value it.”

In Jacksonville Beach, Fla., where prices have soared 15% over the past 12 months, agent Cara Ameer was “holding her breath” when it came time to get an appraisal on a two-bedroom townhouse she sold for $5,000 more than its $189,000 asking price.

“It was FHA financing and [the FHA is] typically much more strict,” she said. That appraisal too ended up coming in above the selling price.

In the first quarter of 2013 our economy grew by 2.5 percent. While some were disappointed with that figure because it fell short of the consensus estimate of 3.0 percent, it’s still a sign of better times, according to Corelogic.com.

The company recently released “The MarketPulse” which highlighted the following: economic recovery is benefitting from residential investment, “census division of price declines in the housing collapse varied dramatically by depth and duration, and the census divisions with the largest declines have the fastest current recoveries.”

There are four census divisions in the United States. These geographical regions contain two or three census divisions for a total of nine. How these areas were impacted and how they are recovering depends on various factors such as the development of new housing.

Build it and they will come. The new housing industry is growing stronger and helping boost the Gross Domestic Product (GDP). Homebuyers seeking new homes are encouraging this growth.

At the lowest point, new home sales dropped to 273,000 annualized sales in February 2011, marking the lowest sales rate in almost 50 years. The highest peak reached 1.4 million annualized sales in July 2005 and today it’s increasing 19 percent from a year ago, according to the U.S. Census Bureau data from March 2013.

Meanwhile, residential home prices are continuing to rise. However, the increase in home prices isn’t uniform across the country. Instead, the recovery is geographically confined to areas that are “either recovering from the boom-bust cycle, or exhibiting strong economic fundamentals and strengthening demographic demand,” according to Corelogic.

The increase in housing prices is also happening in areas where building is booming.

New housing competes with foreclosures and short sales. These latter two groups are now experiencing a decline, making new housing a good solution for some buyers.

Mortgages categorized as seriously delinquent (90 days or more past due) peaked nationally at 3.7 million in January 2010. The figure has recently dropped by 33 percent to 1.2 million.

Corelogic reported that there were 55,000 completed foreclosures through March 2013, which is a decrease of 16 percent compared with the number of the same period last year.

Meanwhile, the summer sizzle season is arriving soon and analysts expect another possible increase in sales and prices which could encourage more sellers to list their homes for sale

If you’re interested in buying, here are a few tips. Act now. Start putting your finances in order so you know what you can actually afford to purchase. Delaying this could mean the loss of your favorite home to a better prepared borrower.

Meet with experts to get the best information and advice about the real estate market you’re interested in. While real estate information is available on line from anywhere in the world, prices vary greatly depending on the local market. Your best bet is to find an expert in the area you’re interested in to assist you with your questions and guide you through your search.

Remember that many sellers are still in a recovery mode. They may just now be adjusting to no longer having their home mortgage “under water”. So, when you find a home you’re interested in, act quickly to engage negotiation about the final sales price.

Also, keep in mind that the housing inventory is likely to increase as housing prices continue to rise. However, many experts predict the shortage of existing homes for sale is likely to remain a problem throughout the rest of 2013.

With home prices skyrocketing in many metro areas and rising fast in others, many potential homebuyers who don’t quickly get off the fence aren’t going to be able to jump on the bandwagon.

Unfortunately, while rising prices and record low mortgage rates would otherwise prompt more consumers to take the home buying plunge, the continuing squeeze on mortgage credit continues to thwart them.

Some windows of opportunity are beginning to open in the tight mortgage credit market, but many consumers who’ve been unable for years to qualify for a mortgage still can’t squeeze through.

Capital Economics recently looked at the tight mortgage market and found signs in the mortgage credit market that conditions are beginning to loosen.

Research reveals slightly looser mortgage credit

•The Federal Reserve’s latest Senior Loan Officer Survey (SLOS) found that 8 percent of banks loosened mortgage credit conditions in the past three months up through April.

Eight percent isn’t much, but credit conditions have been either loosened or held steady for eight of the past nine quarters. Also 27 percent of banks plan to up residential mortgage assets over the next year and know they can’t do that without taking on a little more risk.

•Mortgage lenders also know they can’t improve mortgage assets without keeping up with the growing demand. The SLOS found that 39 percent of banks enjoyed an increase in mortgage demand in the three months ending in April.

Capital Economics also said the Mortgage Bankers Association’s (MBA) index of mortgage applications for home purchase has risen in seven of the past eight months and now stand at a three-year high, thanks to the housing recovery.

•Along with growing demand, lenders are approving more applications. Ellie Mae reports 60 percent of home purchase applications in March were approved, up from 55 percent a year earlier.

Credit conditions remain tight

Even with some easing in the mortgage credit business, conditions remain tight , relative to the days when mortgages were available to the unemployed.

The SLOS revealed only those with healthy credit ratings are passing muster with mortgage lenders and most lenders still demand 20 percent down.

Fear Fannie Mae and Freddie Mac will force lenders to take back risky mortgages continues to be the primary condition constraining lending. More than 45 percent of lenders fear that so-called “put back” risk.

Mortgage delinquencies are down but still high enough for about 40 percent of lenders to also fear a hit to their bottom line.

Other conditions that have lenders holding tight to mortgage purse strings include obtaining insurance; slow economic growth; concerns about securitization and processing capacity.

Lenders continue to remain understaffed as growing demand overlaps the waning foreclosure business.

Home prices have been rising for more than a year, but a majority of consumers are just getting around to expecting home prices to rise over the next year.
 
Somewhat slow on the uptake when it comes to news about the housing market, 51 percent of consumers responded to Fannie Mae’s April 2013 National Housing Survey that they expect home prices to go up, compared to only 32 percent a year ago.

Unfortunately, confidence is growing so slowly it could cause many homebuyers to miss the boat.

That increased confidence in housing prices for the next year comes at a time when many metros’ booming home prices are have been pushing affordability levels out of reach for the past year.

Since the last Fannie Mae housing survey a year ago, a buyer’s market has become a seller’s market as home prices jumped by double digits in many major metro areas.

“For the first time in the survey’s three-year history, the majority of Americans surveyed now expect home prices to increase,” said Doug Duncan, senior vice president and chief economist at Fannie Mae.

No big wup. Confidence is way behind schedule.

Some confidence is due to less financial distress at home, but that’s taken some time to achieve. Confidence is also building over the growing economy in general, another slow-motion event.

The Consumer Reports (CR) Index, a measure of American’s personal financial health, is at its highest level since 2008.

CR said consumer sentiment, at 54.5 and up from 50.1 last month, is a broad-based improvement, crossing all income and education groups, but the greatest gain was among lower-income consumers in households earning less than $50,000.

“It has been a real positive month for a lot of Americans. The recession has had a long tail that continues to burden lower-income families disproportionately. Improving sentiment among that group indicates that they are starting to feel better about the days ahead,” said Ed Farrell, director of consumer insight at the Consumer Reports National Research Center.

That confidence has spilled over into the housing sector.

“Crossing the 50 percent threshold marks a significant milestone as most Americans believe a housing recovery is truly occurring throughout the country. Many homeowners who have been underwater are gradually returning to positive equity, and selling is now becoming an available and attractive option again,” Duncan said.

The share of consumers who said now is a good time to sell climbed 4 percentage points in April to 30 percent, compared to 15 percent at the same time last year.

That’s all more good news for sellers, the housing market and the economy in general, but the homebuyers are getting stuck behind the eight ball, suffering ever-rising home prices.

It’s a quandary.

If prices don’t rise fast enough to bring even more sellers to market to help slow down the rise in prices, confidence won’t be enough for consumers to actually buy a home because they’ll be priced out of the market.

Of course, if a too-few-buyers equation replaces the current too-few-homes-for-sale market conditions, prices could take a hit.

Fannie Mae also found other data that indicate a somewhat skewed recovering housing market.

Homeownership and renting

•The average 12-month home price change expectation held steady at 2.7 percent, far below actual increases over the past year and forecasts for the next year.

•The share of respondents who say mortgage rates will go up fell 3 percentage points to 43 percent, while those who say rates will go down increased slightly to 7 percent.

•At a survey-high 30 percent (still less than one in three), the share of respondents who say it is a good time to sell a house increased 4 percentage points over March.

•The average 12-month rental price change expectation held steady at 4.1 percent.

•Forty-eight percent of those surveyed say home rental prices will go up in the next year, a 2 percentage point decrease from last month’s survey high.

•The share of respondents who said they would buy if they were going to move increased slightly to 65 percent.

The economy and household finances

•At 39 percent, the share of respondents who say the economy is on the right track increased 4 percentage points over March.

•The percentage of people who expect their personal financial situation to get worse over the next 12 months fell 5 percentage points to 16 percent.

•Twenty percent of respondents say their household income is significantly higher than it was 12 months ago, holding steady from last month.

•Eleven percent reported significantly lower household expenses compared to 12 months ago, a 3 percentage point increase over March.

The pace of home price increases continued to accelerate in February, according to a reading Tuesday that showed the biggest gain since near the height of the housing bubble.

The S&P Case-Shiller index of home prices in 20 major markets posted a 9.3% rise over the last 12 months. That’s up from the 8.1% rise in January. It was the biggest 12-month gain in the index since May 2006, which was just one month after the index showed record-high home prices.

The index showed a 12-month decline in prices almost every month over a five-year period through May 2012. But every month since then has shown a gain in home prices, and each month’s gain has been stronger than the one that came before.

“Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy,” said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.

Stan Humphries, chief economist for home price tracker Zillow, said there are signs in the market that the pace of increase started to slow in March.

“Regardless what data you look at, home values are clearly rising at an unsustainable pace,” he said. He said the increases in the index need to be taken with a grain of salt, being distorted by the shift in transactions to private home sales rather than the foreclosure sales that had been dominating the market.

The housing recovery has been driven by a number of factors, including near record-low mortgage rates, a drop in foreclosures and reduced unemployment, all of which have helped lift both new-home sales as well as sales of previously owned homes. The rising home prices has helped bring back some buyers who had been reluctant to buy while prices were falling.

Mike Larson, real estate analyst at Weiss Research, said he’s concerned that much of the increase is being driven by investors flooding into some markets to buy homes in order to rent them out, outbidding the potential homeowners who want to live in a home.

“Prices are not at bubblicious levels, but you’re talking about a trend that can be destabilizing,” he said.

Mark Vitner, senior economist with Wells Fargo Securities, said part of the reason for the sharp rise in prices is the comparison to depressed prices a year earlier. He said comparisons will become more difficult later this year. and the pace of increase should slow.

Home price increases boost the overall economy. Besides the jobs created by a pick-up in construction and home sales, rising prices mean fewer homeowners are underwater on their mortgages, owing more than the home is worth. That allows more homeowners to refinance, saving money they can spend on other things.

The Case-Shiller index showed the improvement in home prices is broad based, as every market posted an increase for the second straight month. The biggest increases came in Phoenix, a market hit hard by the bursting of the housing bubble, where prices were 23% higher than a year earlier.

But prices were up more than 10% in half of the markets — San Francisco, Las Vegas, Atlanta, Detroit, Los Angeles, Minneapolis, Miami, San Diego and Tampa all posted double-digit percentage gains, and Denver just missed that mark. New York posted the smallest gain, with only a 1.9% rise in prices.

Dean Baker, co-director of the Center for Economic and Policy Research, said some neighborhoods in Phoenix are actually seeing a 40% increase in prices over the last year, driven once again by property speculators. He said in many markets that were most hurt by the bursting of the housing bubble, there is a danger of new bubbles forming.

“The end of this round of speculation is not likely to be much prettier for the areas affected than the end of the last round,” he said.

Even with the strong improvement in prices over the last 12 months, the index is still down 28% from the 2006 peak.

The most recent trend of decreasing-to-flat housing stock and an increase in the median list price per square foot continued in April, marking the fourth straight month the real estate market has spurred seasonal trends. According to our analysis, 32 of the 38 cities we track saw a decrease in inventory on a year-over-year basis, while 30 of the 38 cities saw an increase in median list price per square foot on a year-over-year basis.

As we’ve said in the past, this combination indicates a seller’s market, as fewer homes on the market increases home buyer competition and helps drive up listing prices. While the warmer months of the year are traditionally the most active for the real estate market, our analysis showed that 2013, so far, has gone against the grain. Our assumption is that current homeowners and investors are waiting for home prices to increase before they attempt to sell—to the detriment of first-time home buyers.

Our monthly State of the Market reports looks at 38 geographically diverse cities throughout the country. We examine each city’s median list price per square foot and inventory level. The data we collect is used to gauge the current real estate market through the creation of a price per square foot index and a tabulation of total inventory level. Our data comes from the Multiple Listing Service.

Median List Price Per Square Foot
The median list price per square foot across the cities we track is up on both a year-over-year basis and a month-over-month basis.

Price Per Square Foot: Year-Over-Year
In April 2013, the median list price per square foot increased by 13.2 percent, reaching $174. Just 12 months prior, it rested at $153. This is a significant leap as home prices typically increase by 3 to 5 percent in a given year.

Of the 38 major cities we track, 30 saw an increase in the list price per square foot. These cities saw the greatest increase:

Sacramento: Sac-Town saw a dramatic increase of 61.1 percent compared to the same time in 2012. Today, the cost for a home on a square foot basis is $145. Just 12 months ago this figure was only $90. The large increase in cost can be attributed to the city’s lack of housing inventory, which we detail below.

Los Angeles: The City of Angels witnessed an increase of 40.7 percent, from $295 in 2012 to $415 in 2013.

Mesa: In the past year, the price per square foot in Mesa increased by 28 percent or $23. In 2012, homes in the area were valued at $82 per square foot; today they are valued at $105 per square foot.

At the other end of the spectrum, Chicago had the greatest decrease by far in cost on a per square foot basis. In April 2013, Chicago homes were valued at $146, down from $166 in 2012; this is a decrease of 12 percent.

Price Per Square Foot: Multi-Year Comparison
Our multi-year comparison shows that prices have increased for the past two years; however, the overall price per square foot is lower than in 2010. Since 2012, the price per square foot for a home has increased by $12, from $153 to today’s price. Compared to two years ago, the increase was slightly more pronounced at $13. Still, things aren’t as good as they were in 2010 when our index priced homes at $176 per square foot.

Price Per Square Foot: Month-Over-Month
According to our list price index, home prices increased by $3 per square foot since March, up from $171 per square foot. This increase continued a nine-month trend in which the median list price per square foot had trended upward. Since July 2012 homes prices have increased from $150 to $174, with only a slight dip in price that occurred in December 2012.

Inventory Level
In 32 out of 38 cities, inventory decreased on a year-over-year basis. However, there was a very slight increase in the total number of homes on the market on a month-over-month basis.

Inventory Level: Year-Over-Year
Across the 38 states we cover, inventory dropped by 24,019 homes or 19.4 percent year-over-year. This time last year, there were 123,648 homes on the market, while today there are a scant 99,629.

These cities saw the greatest change:

Oakland: In the past year, inventory levels dropped by 79.3 percent. In 2012 there were 720 homes on the market—already a low figure, while today there are just 149 homes available to home buyers.

Sacramento: Sac-Town’s inventory level decreased by 66.5 percent in the last 12 months. In April 2012 there were 2,750 homes on the market; a year later there were 920 homes for sale.

Long Beach: Long Beach saw a decrease of 54.7 percent. In April there were 1,830 fewer homes on the market than during the same time the previous year. In April 2013 there were 780 homes

Still, there are bright spots where inventory levels increased. These cities saw the greatest increase in homes for sale:

Baltimore: Today there are 1,292 more homes on the market than during the same time last year. This is 34.7 percent increase. In 2012, there were 3,719 homes on the market, while in 2013 there were 5,011 homes for sale.

Miami: April ended with 1,062 more homes on the market than during the same time the previous year. This is a 19 percent increase in the number of available homes on the market. In 2012, there were 5,576 homes for sale; in 2013 there were 6,638 homes on the market.

Colorado Springs: With just 152 homes on the market in Colorado Springs, home buyers are already hurting. Still, this is number is up from 133 homes the year before. This is a 14.3 percent increase compared to the same time one year ago.

Inventory Level: Multi-Year Comparison
When compared to the same time in both 2011 and 2010, there are significantly fewer homes on the market. In 2011, there were 180,772 homes on the market; in 2010 there were 171,823 available properties.

Inventory Level: Month-Over-Month
Compared to March, there was a slight increase in the number of houses available to home buyers. In April there were 99,629 homes on the market, compared to 98,336 in March. This continues a five-month trend in which the housing level remained relatively flat.

Inventory Levels: Point of Interest
Our data indicates that Miami’s housing market is stabilizing. In the past year, Miami’s inventory and home price per square foot increased. As mentioned above, Miami’s inventory increased by 19 percent. At the same time, the price per square foot increased from $148 to $153 in the past year. This is a modest (and welcome) 3.3 percent increase.

Seller’s Market
Our data indicates that it is currently a seller’s market in the majority of the cities we analyze. Depending on whether you are a homeowner looking to sell or a home buyer this is good or bad news. Unless enough homes come onto the market during the spring buying season, home buyers can expect to see inflated prices.

By Matt Assad, Of The Morning Call
 
As New Yorkers and Jerseyites in search of more house and a bigger yard migrated to the Lehigh Valley’s exploding suburbs, the region’s struggling cities of Allentown, Bethlehem and Easton experienced nearly four decades of population flat-lining.

But lately something has changed to make Lehigh Valley planners detect, well, an urban pulse.

For the first time in decades, middle-income people seeking affordable housing are looking in the cities. And young professionals are looking to urban communities where they can walk to shop, play and maybe even work.

As a result, the Lehigh Valley Planning Commission predicts that by 2040 more than 40,000 more people will be living in the Valley’s three cities.

Allentown’s formerly stagnant population will increase to nearly 140,000, Bethlehem will bulge to almost 90,000 and Easton will grow to nearly 34,000, the planners say.

For Bethlehem and Easton, it would represent the first significant gains in more than 40 years. For Allentown, it would be an extension of the surprising 2010 U.S. Census; most demographers had been predicting the city’s decline.

Planning Commission Executive Director Michael Kaiser cautioned that the new numbers are just projections — an educated guess based on the trends as he and his staff sees them. But he also pointed out he isn’t making the forecasts lightly.

It’s the first time in decades that the Planning Commission has projected such optimism for the Valley’s urban core.

“We think people are coming back to the cities,” said Kaiser, who has directed the Valley’s planning commission since 1967. “That’s not to say growth in the suburbs is over, but people are rediscovering the benefits of living in a walkable community. It’s quite a change from the past 30 or 40 years.”

It’s certainly a departure from what the commission has been projecting in its annual forecast. Just two years ago, it predicted virtually no growth in any of the Valley cities through 2030. But then, the 2010 U.S. Census numbers revealed that Allentown had grown by nearly 11 percent, adding 11,400 people since 2000.

Bethlehem’s 5 percent increase to 74,982 and Easton’s increase of just a few hundred to 26,800 were certainly smaller, but it all prompted commission experts to begin looking at the future in a different light. When they did, and combined it with emerging national trends, the new numbers were startling, Kaiser said.

Those new forecasts say that by 2040, Allentown will add more than 21,000 people, Bethlehem will grow by 14,500 and Easton will be home to more than 7,000 additional residents.

There are plenty of national indicators to back those predictions, said Christopher Leinberger, visiting fellow for the Metropolitan Policy Program of the Brookings Institution in Washington, D.C. A Brookings study last year determined that for the first time since the 1920s, the 51 largest cities in the nation are growing faster than their suburbs.

Cities like Austin, Texas, Tampa, Fla., Denver and Atlanta each grew more than 3 percent in 2011 alone, and Washington, D.C., is adding 1,500 new residents per month, Leinberger said.

The reasons for the return to the cities are many, and largely speculative, admits Leinberger, a planner and developer who has studied urban development for more than two decades. There appears to be a theme: After three decades of building giant homes in the suburbs, a new population of “knowledge class” people are looking for the more affordable or more convenient housing in the city.

They’re young professionals — software developers, financial experts, data engineers and computer programmers — who want to live within walking distance of work, shops and their favorite restaurants. And they’re empty-nesters who bought those massive suburban homes, lived in them for decades and are now looking to downsize.

In short, two major groups that make up half the population — baby boomers and their children — are now looking for the same kind of walkable communities.

“We haven’t had a major change in demand like this since they started building suburbs 60 years ago,” Leinberger said. “This isn’t going to go away soon. It’s going to take them 25 or 30 years to catch up with this change.”

In the case of this region, Lehigh Valley cities can also expect a continued stream of people from New York and New Jersey willing to accept a longer commute in exchange for more affordable housing.

Valley mayors who have watched their towns struggle through decades of decline are counting on it. Bethlehem Mayor John Callahan said hundreds of new luxury apartments are being marketed to those two growing groups.

“Our population is getting younger and smarter,” Callahan said. “Those are two wonderful trends to have going for a city.”

In Allentown, the growth is even more imminent, with developers snapping up downtown property to build what figures to be hundreds of upscale apartments near a new hockey arena complex.

“It’s not a myth, it’s already happening right here, right now,” Easton Mayor Sal Panto Jr. said. “We’ve opened more than 100 new downtown apartments in the last 18 month and another 100 will be open soon. Young people are coming back.”

People like Jim Henkel. He was driving an hour from his home in Chester, N.J., to his job at EPS Financial in downtown Easton, when in 2011 he decided to move into a newly built apartment downtown. For rent that is less than the real estate taxes he was paying on his New Jersey home, he’s two minutes from work and in the middle of a burgeoning restaurant district he’s certain is about to explode.

“I feel like I have an extra two hours of my day back,” Henkel said. “Plus, I get to be part of this cool renaissance that this town is going through. I love it.”

And so do plenty of his colleagues. Since Henkel moved two years ago, EPS has grown and 10 of the company’s 25-member staff now live downtown.

Valleywide, the planners expect 227,000 people by 2040, an increase of 35 percent. And the burbs that boomed before the recession are expected to continue: Upper Saucon Township will nearly double its population, and Upper Macungie Township will grow 80 percent.

Most of that was expected; the revival of the cities is what’s surprising about the forecast.

Of course “we’re not fortune-tellers,” Kaiser said. “We could be wrong. Wouldn’t be the first time.”

The housing recovery comes with an economic boost, more jobs and higher incomes, but it can also help create a higher level of “good times” in the neighborhood.

Housing isn’t just a cornerstone for the economy, it also plays a major role in weaving a tighter-knit social fabric for America.

Housing, including shelter itself, household operations, insurance, fuels and utilities, water, sewage and trash services and furnishings, among other expenditures, account for about 40 percent of the Consumer Price Index, an index of consumer expenditures, according to the U.S. Bureau of Labor Statistics.

Consumer spending is the fuel that powers the nation’s economy and with home buying comes millions of jobs for workers who build the homes and others who keep them standing.

Beyond the builders and the contractors, residential real estate is an industry with a virtual A-Z (real estate agents to Zip-Lock bag makers) support system of workers in virtually every walk of life.

And it doesn’t stop there.

Among homeowners, housing also has a very strong social component, something you can’t put a price on, according the California Association of Realtors (CAR).

Among other findings, studies reveal:

•Children of homeowners tend to be better math and reading students.
•Homeowners are more politically active and vote more.
•Homeowners are more civic and spend more time volunteering.
•Homeowners are healthier. They report a higher quality of life, less stress and higher self esteem.