Ika's Las Vegas Blog
A Tinge Of Optimism For The Housing Market
A housing recovery will happen sooner rather than later.
Robert Shiller - an Economics Professor at Yale - says that we just had one good month which does not make a trend or a turnaround; but it is a good sign.
The housing market trended up from 1997 through 2006. Then, the housing market started going down and continued going down for the next 5 years.
Shiller says that there have been two major housing crises: the 1930's and this one. Housing takes longer to recover because it needs to have momentum, unlike the stock market, which can turn on a dime. We don't have a lively economy right now. Consumer confidence is down. The government is battling the debt issue. These issues will get resolved.
Shiller’s tinge of optimism comes from the state of the market. There is an inventory of 1.8 million homes that we call distressed homes. Where is the optimism in that number?
Here are the glimpses of optimism:
• Home prices inched up in May • Population is still growing • People are buying homes • Investors are buying one or many homes - and many with cash.
New housing is almost at a standstill, which is not adding to the inventory surplus • Home prices are affordable for 90% of the working population who have jobs.
There is a traffic report of back logged buyers who will eventually buy When we see several months of increasing home prices, combined with increasing momentum to the positive side, then we can count on the inevitable recovery.
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