Saturday , 15 June 2024

This Hard Data Clearly Says: Real Estate is in Recovery Mode!

Auto sales, consumer confidence, manufacturing, retail sales, exports – you name it – over the last six months, nearly every facet of the U.S. economy has shown improvement and the real estate market is no exception. [Here are 11 irrefutable signs that such is the case.] Words: 800

So says Louis Basenese ( in edited excerpts from an article* which Lorimer Wilson, editor of (Your Key to Making Money!), has edited below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.

Basenese goes on to say, in part:

Here’s the irrefutable proof:

1. Housing Starts UP

  • up 14.7%, on an annual basis, in February…from the 608,800 starts in 2011…
  • up 18.9% from the 586,900 starts in 2010… and
  • up 25.9% from the record-low 554,000 starts in 2009.

Even after the uptick, though, we’re nowhere close to the high-water mark of 2.07 million starts hit in 2005.

2. Building Permits UP

  • In February, building permits – a proxy for future construction – climbed to an annual rate of 717,000 units. That was ahead of expectations. It also represents the highest level since October 2008.

3. Inventories DOWN

  • New home inventories [plummeted to] their lowest level on record in January [which means we can] expect even more building on the horizon.
  • If we include existing homes in the mix, the total number of homes listed for sale has dropped – on a year-over-year basis – for 12 consecutive months.
  • The…[number of] homes listed for sale… is down 19.3% in the last year and down 39.8% from the record inventory…[level] in July 2007.

4. Multiple Bidding UP

  • The lack of inventory is creating a competitive bidding environment. Online brokerage firm, Redfin, reports that agents encountered multiple bids on about 50% of offers in Seattle, Boston, Washington D.C. and Oregon through March 15.

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5. New Home Sales UP

  • New home sales in February were up 11.4% to 313,000 units from last February’s rate. Last year, new home sales fell to 302,000 units – the worst reading on record – from 2005 in which 1.28 million new homes were sold. [The aforementioned suggests that the] market has likely bottomed out.

6. Existing Home Sales UP

  • In the last year, demand for previously owned homes ticked 8.8% higher…and the number of contracts to buy existing homes in February jumped even more – up 14% year-over-year.

7. Prices (in Some Markets) UP

  • Prices will be the last sign of a recovery. They’re a lagging indicator, like unemployment. That being said, signs of a price rebound are materializing. Based on the latest Case-Shiller Indexes, prices in Miami and Phoenix – arguably two of the hardest-hit real estate markets – were up in January by 1.2% and 2%, respectively. That marks the third consecutive month of improving prices in Miami and the fourth in Phoenix.

8. Confidence UP 

  • The National Association of Realtors/Wells Fargo Index of builder confidence climbed for the sixth month in March. It’s now at the highest level since 2007.
  • The CEO of the nation’s third-largest homebuilder recently said, “A very real trend is beginning to take shape… There are empirical data points that are today confirming that the market is showing real signs of stability.” Indeed!

9. Historic Affordability

With prices down an average of 36% from the peak – and rent prices rising – it’s never been cheaper to buy a home. In fact:

  • The National Association of Realtors Housing Affordability Index hit a record high of 206.1 in January. (A value of 100 means a family earning the national median income can afford a median-priced property at current mortgage rates.)
  • A study by Trulia found it’s now less expensive to buy than rent in 98 of America’s 100 most populous metropolitan areas. (Honolulu and San Francisco were the lone exceptions.)
  • Deutsche Bank reports that the average rent is now 14.9% more than the average home loan payment – up from 8.1% in the previous quarter, yet another study showing that the affordability gap is widening in favor of buying.
  • Borrowing costs are also down about 20% in the last year [to] an all-time low of 3.87% in February.

10. Employment Improving

It’s hard to buy a house if you don’t have a job and no one can deny that the labor market is improving.

  • In the last eight months, the unemployment rate is down almost one full percentage point.

11. An Influx of “Smart Money”

Greg Zuckerman of The Wall Street Journal reports, “Over the last couple months some of the best investors on the street… have been making big bets on homebuilders”…[companies such as] SAC Capital, Blackstone, Caxton Associates, Cerberus, Canyon Partners and CQS U.K.

Bottom line:

Add all the hard data up and it’s clear – the real estate market has officially entered recovery mode.

* (To access the article please copy the URL and paste it into your browser.)

Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. 

Related Articles:

1. What Does the Latest Rent vs. Buy Index Have to Say?


If you have been on the fence trying to decide if you should rent or buy, the market may be in your favor. According to Trulia’s Winter 2012 Rent vs. Buy Index it is now cheaper to buy a home rather than rent in 98 of the 100 largest U.S. metropolitan areas. How can that be? Take a look!

2. Your House: A Home, An Investment or a Ponzi Scheme?


In the past few decades, the concept of home ownership has been completely turned on its head. Previously, homes were considered a very long-term consumption good…[No one] ever considered tripling the value of their homes by retirement time and selling them to move beachside yet, somehow along the way, this became a reasonable investment expectation. Even today, home buyers still make their purchases with the hopes of escalating prices. [It begs answers to these questions: Is a house just a home? Should a house be expected to behave like an investment? Is the housing game nothing more than a Ponzi scheme where the end buyer before the market corrects becomes the “greater fool”? Let’s try and answer those questions.] Words: 935

3. Price:Rent Ratio Suggests House Prices Have Further to Fall

The rat-through-the-snake process of working down existing and prospective distressed properties is likely far from over, and how that process plays out will no doubt have an impact on how much housing prices will ultimately adjust. [Let’s take a look at some differing points of view in that regard.] Words: 497

4. U.S. House Prices Have MUCH Further To Fall! Here’s Why


There has been a deluge of articles recently about the upticks in the housing data…[yet, while] I do not dispute the improvement in the data regarding home starts, permits, pending sales, etc.,… [see graph below] these data points are still mired at very depressed levels so the assumption is that if home building is stabilizing then it is only a function of time until home prices began to rise as well. Right? Not so fast.. [Let me explain.] Words: 1100

5. A Housing Boom is Coming! A Housing Boom is Coming! Here’s Why

Mortgage Notes

Yes, you read that right; get ready for the next housing boom. You’re probably thinking, “How could that be with all the mortgage delinquencies and foreclosures going on, and the record levels of housing inventory? Well, it’s not going to happen soon – [probably] not for several more years – but it’s coming. [Let me explain to you why it is inevitable.] Words: 589