Is a real estate recovery right around the corner? Well, if you ask the experts at Fortune magazine, the answer is unequivocally, YES! In an article released last month, Shawn Tully, Fortune's senior editor-at-large stated "simply and forcibly - HOUSING IS BACK." And this isn't the first time that Mr. Tully has pontificated about the future of housing. At the beginning of 2005, Shawn Tully actually wrote a cover story for Fortune magazine entitled, "Is the housing boom over?" in which he accurately predicted the bursting of the real estate bubble, and the subsequent drop in housing prices.
Using the exact same fundamentals he used to draw his conclusions back then, Mr. Tully is convinced that today's housing market is right on the cusp of another major upswing, and says that NOW is the time to buy a new home. One of those fundamental market indicators is the overall inventory of new homes. In his article for Fortune, Shawn Tully interviewed Mike Castleman, CEO of Metrostudy, a company that has spent more than three decades tracking real-time data on the country's inventory of new homes. Their customers include some of the biggest players in the business, including Pulte & KB Homes, as well as mortgage giants Bank of America and Wells Fargo.
According to Castleman, in the last 35 years, he has never seen a shortage of new homes like he's seeing today. In fact, of the 41 cities that Metrostudy covers, a total of 78,000 homes are either for sale or under construction, as compared with over 343,000 at the peak of the market in 2006. That's a 75% drop in inventory in just a few short years, and places us well below the level of a decade ago. Mr. Castleman added that "If we had anything like normal levels of buying, those houses would sell in under 2 1/2 months. That would create an unbelievable shortage, and that's precisely where we're heading.
Mr. Tully added that for this scenario to play out, the US will need a halfway decent economy, with job growth and an uptick in consumer confidence, but that's exactly what we've been seeing in recent months...so the future looks bright. Now it's our time! Realtors and active investors must unite to take this message out on the streets, and be a town crier of sorts. We must continue to fight the battle for the hearts and minds of homebuyers, and work hard to combat the negative stories that are dominating our news headlines. Then we will begin to see our local markets pick up some real momentum, and the overall economy will start moving rapidly towards a sustained recovery.
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