28 Mar Real Estate Matters
The housing market has been a roller-coaster for more than a decade now and to some the struggles in the real estate sector don’t change much or even effect your day to day. However, this market has had some interesting developments in domestically and on foreign ground. The housing market can effect the stock market in multiple ways, home building and home improvement firms have a decent portion of the stock markets value. Not to mention the fact that the housing market dips deep into the economy as furniture manufacturers, plumbers, electricians, landscapers, and many more industries depend on the behavior of the housing market. Because of this, the wide spread wave of change in the housing market can become very influential very fast if not understood and prepared for.
In the U.S. existing home sales are down 7.1% in February, and up 2.2% over last year. What this tells us is that the pace at which these homes were selling came to a very sudden stop, with the annual rate falling about 9% from 11% to 2.2%. This change even stirred the National Association of Realtors to call this drop “meaningful”. When the guys trying to sell you the houses are no longer optimistic about the condition of the market, that’s a good time to at least be curious. This is most likely tied to the low levels of consumer spending in recent months. This situation could also be the middle of an adjustment period for builders trying to focus on the group that will still pay for housing – millennials looking for their first home. Also New home sales have gone up 2.1% in February but are down overall by about 6.1% over last years’ sales. Prices remain high sitting at about $300,000. But the astonishing number is the amount of new homes up for sale, 240,000 which is a seven-year high in this market. This could mean that builders are playing it safe right now to avoid a massive inventory surplus when the market turns sour on them.
In Japan the Real Estate situation is grey, very grey, but not quite dark. Japanese Real Estate values moved higher for the third time in 26 years, but only by 0.1%. This is the first move up since 2008 and only the third increase in value since 1990. The commercial property in urban areas was reported to have decent gains, but the population shrinkage, especially in the rural areas, is hurting residential sales. This could simply be because of the flood of cash out of China, but based on their track record, this “jump” in the Japanese Real Estate market will not likely last too long.
The housing market may be struggling right now, but that doesn’t mean that you have to. Call David Ortiz your Registered Investment Advisor Representative, today and make sure that you and your hard earned assets are safe and sound.