A Look at the Indicators... Where is Housing Headed

For any speculator, this is a fun time to be looking at the market.

"Why is that?" you ask.

It's because the market is putting on a great poker face. Here are some of the curve balls we've witnessed over the past couple years:

Homes have lost equity, stocks have lost ground, transportation prices have soared, the national deficit has increased, the dollar has weakened, state and local governments are facing deficits from loss of property tax revenue, etc.

All of this activity has kept money tight. That is to say, people are being careful with their discretionary income. Whenever this happens, housing chills.

It also means that investors and bargain hunters begin to look at the data.

Anyone who has ever wanted to "buy low" looks for times like these.

Such deal-finders will want to purchase at the lowest point possible.

Are we there?

Very good question.

Answer: We won't know until the time has passed.

In other words, we don't know the bottom until we've had a rise in activity that is sustained over time.

So, the best we can do is spot the trends... and see if we're headed up or down.

There's an interesting article that came out today. It's from Reed Construction Data's website and it titled, "U.S. Housing Indicators Move a Long Way In the Right Direction for Recovery"

This article contends that many of the indicators are not moving south. They aren't necessarily traveling north either. This bottoming effect doesn't mean that we are officially at the bottom of the market but it does provide evidence that one could at least argue the point. Here are some of the details:

• Housing starts have remained at a somewhat constant pace for the past four months.

• Unsold inventory of new homes is below the peak of July 2006. The figures are comparable to late 2004.

• The number of unsold existing homes has dropped from a peak of three months ago.
  

The report also proclaims "Bargain Days for Foreigners Wanting U.S. Property". Citing

"a significant pickup in Canadian citizens buying property in Florida, Arizona and ski country. Certainly, from an economic standpoint, such purchases make sense. These are bargain days for American property as far as many foreigners − Europeans, Canadians and Australians − are concerned. The two primary factors are: (1) the home price declines as noted above: and (2) major currency shifts, due to U.S. dollar declines over the past five years, that have further lowered U.S. prices for people from outside the country."

Hey... there's a report that I can confirm! As an Arizona agent, based in the Phoenix area, I can confirm that we are experiencing such investor activity here. Agents in other areas could give you more information about what is happening in their area.

Of course, all of this information is a snapshot on today's market. These trends could persist or they could markedly change in direction. There's no doubt that we've been riding a bit of roller coaster these past few months. It will be interesting to see where the track leads next.

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Chuck Willman

Gentry Realty & Investments

480.292.0600