I just sent this out to my clients – a brief mid-summer update on the housing market and economic trends. Bottom line? Things look positive.
The housing market nationally has been leading the recovery of the economy as a whole, but now it has an ally with jobs growth. Associated Press reports this week that employers added nearly 288,000 jobs in June, making five consecutive months now of gains above the 200K mark. In the last year the economy has added almost 2.5 million jobs, an impressive number, showing a gain rate we haven’t seen since 2006.
While jobs growth reflects business confidence, Americans generally also report a positive attitude about housing. Arguably, home ownership involves at least the same kind of time-horizon as many business decisions, and a reliable future is always an asset.
As with every indicator in this recovery, housing indicators continue to improve at a sloooow pace, improving one point at a time. Like watching paint dry however, somehow the change does happen, and taken together we see the continued uptick of people wanting to buy and able to sell, coupled with decreased worries about economic prospects.
Interest rates remain a tease – they must continue to rise eventually, but they’re checked at the moment and the Fed just indicated it wants rates low for as long as possible while the economy regains its robustness.
It’s still a landlord’s world out there, and rents have continued up this year, an additional incentive to purchase. Rents may be peaking right now, with new multi-family property coming on the market. Also some early investors in single-family homes are now flipping the properties rather than holding – but still to other investors and not yet to potential homeowners.
Inventory remains tight in Florida and across the nation. Desire to own remains high, straining at the leash. Prospects across all markets seem positive. The fat margins of expansionary boom times may never come again, but all this means is that people have to calculate more carefully what they can and can’t do. Careful homeownership instead of irrational exuberance? I can live with that.
Talk soon!
