Positive Economic Signals from National Housing Price Trends

There was good news recently about housing price rise in 20 cities. The national trend is also very encouraging, especially for people who are underwater on their mortgages. Housing prices through September across the US are up a steeper-than-normal 15.0% since the January 2012 seasonal low. In the last dozen years, only 2005 (remember the boom year!) was better at 21.2%. 

Don’t be surprised if you see prices decline over the next few months. A normal September-to-January seasonal weakness in pricing results in a 3.9% price decline. 15.0% higher followed by a 3.9% decline – I’ll take that any day. Increased homeowners equity helps people retire better, and it will provide consumers with a needed cushion when we get to the next significant economic downturn.

Another piece of good news in the housing industry is found in the decline in the vacancy inventory. Some of this decline is not real in that it is no doubt tied to a banking bottleneck where people are living in a home that they stopped paying on months ago These soon-to-be vacant homes will take some of the shine off the overall trend. 

Nevertheless, the inventory has fallen to the lowest level in just over four years. That is a good sign for the industry and it is consistent with our forecast of economic recovery in the U.S. as we head into 2013. 

We have encouraged a lot of people to acquire rental property. The U.S. Rental Vacancy Rate stands at 8.6%, the lowest in 9¾ years and flat with 2Q12. Snap up single-family rental property for positive cash flow and sell it next decade for a healthy capital gain.