[ARCHIVE] Make Your Move

Positive Economic Signals from National Housing Price Trends

Rising housing prices and decline in the vacancy inventory bode well for the US economy in 2013.

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. 

 

Discuss this Blog Entry 2

on Jan 6, 2014

An interesting article about the housing prices – I bought my own home 5 years ago in Sydney and it was the best thing I did. I would advise anyone who is renting to seriously consider investing in property if they can afford to as, even if prices do go down for a while, they always creep back up and you will always make a tidy profit at the end of your payment term.

on Jan 23, 2014

It looks like the economy is on the way to recovery in the U.S., and here in Australia too things are starting to look up with house prices and consumers spending more. I am considering investing in a rental property as suggested as I have some savings and property seems the best form of investment as you can make a healthy capital gain within just a few years. I’ll have to check the rates out here before I make a decision.

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Leverage actionable -- and 94.7% accurate -- economic forecasts from ITR Economics, and spot unfolding business cycle trends before your competitors.

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Brian Beaulieu

Brian Beaulieu has been an economist with ITR Economics since 1982 and its CEO since 1987. He is also Chief Economist for Vistage International and TEC, global organizations comprised of over 13,000...

Alan Beaulieu

One of the country’s most informed economists, Alan Beaulieu is a principal of the ITR Economics where he serves as President. ITR predicts future economic trends with 94.7% accuracy rate and...
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