January 2nd, 2013 10:45 AM by Nick Rapplean
Should we be pleased or worried by the enthusiasm for the real estate recovery that can now be found in the major news media? I suspect there is reason to be pleased.
Real estate is shining more brightly as we head into 2013 than it has in years. Home prices are on track to notch their first yearly gain since 2006, Nick Timiraos wrote recently in the Wall Street Journal, the strongest performance since the housing bust and a development that could accelerate the real-estate rebound even as the broader economy stutters.
Demand for existing homes is powerful. Sales were up from November 2011 to November 2012 by a remarkable 14.5%. And new homes, very few of which were built in recent years, have people camping out in new developments, making sure they hold on to their place in line. Sales were up 4.4% last month.
While 18 of 20 cities posted year-over-year existing home price gains in October [according to the S&P Case-Shiller Index], the largest increases have taken hold in some cities hit hard by the bust. In Phoenix, for example, prices have jumped by 21.7% over the past year.
Most economists agree that prices are unlikely to continue rising at that pace for long and that the upward surge is primarily the result of how far prices had fallen. For now, though, some of the damage done to real estate values especially in many of California’s currently strongest markets is on the mend and that means homeowners ability to refinance and sell their homes is being restored. It also means that the quality of life in many formerly economy-ravaged neighborhoods is rising again.
There is still more evidence of the growing strength of the real estate market in our part of the world. There is a lot of foreign money poking around U.S. real estate, observes investment adviser Chris Mayer in Daily Resource Hunter. He notes that foreigners recognize the values and opportunities in today’s American real estate market, especially in markets like the Bay Area, Sacramento, and others even further afield.
Real estate is intensely local, Mayer reaffirms. Yet real estate is also connected globally, which you may not appreciate. People go where they can get a deal. For now, the U.S. is one such place. One of Mayer’s clients, a man from South Africa, said, I think it is once in a lifetime, this current situation.
Really? Okay, just how optimistic can we get? According to many observers today, we can hazard far more optimism than wed expected to until perhaps very recently.
If the politicians don’t drag us through the mud, this could be a Happy New Year indeed.