The "Case-Shiller" housing numbers index that was released this morning pointed to a stabilizing and modestly growing housing market (wow can it really be??)..if the positive trends that were seen in the numbers this morning continue, we could really start to see the struggling housing market recover. In looking back over a few interviews that have been had with the CEO's of some of the largest homebuilder companies in the country, here are some of the brightspots I picked up on.
- Spring Selling Season is strong. February and March selling numbers have grown at a better pace than we've seen over the past 4 years.
- Homebuilder pricing power is returning. Toll Brothers, one of the largest homebuilders in the country, is having its best selling season since 2007, and 30% of the companies communities are seeing increases in pricing.
- Florida's starting to look good again. One of the hardest hit areas in the country during the housing collapse, Florida is seeing stabilization in home prices and the number of foreclosures has been dropping over the past 6 months.
- The number of foreclosed homes sitting on the market has started to fall over the past couple of quarters. For example (and this data comes from another money manager I know), in Phoenix AZ, the number of foreclosed homes sitting on the market used to be 15 months worth, now that number is down to three.
- The price of land in certain regions on the west coast is soaring. While the actual housing market is still not seeing the pricing growth that raw land is, land property is a leading indicator of housing growth.
- Historically low interest rates. The Federal Reserve remains committed to keeping interest rates at extreme lows until the U.S. economy is back on stable economic footing. Low interest rates help to lower the affordability of housing, therefore serving to make home ownership more attractive and possible.
And now for the bad chinese food...
Overnight, the Chinese stock market saw a decline of over 2.5%, which was the biggest selloff in over 3 months. The market has been struggling of late, as it appears that the Chinese economy (which is built on manufacturing) and the housing market (which has seen a speculative bubble similar to what we had in 2006) are struggling more so than previously thought. All along, economists have thought that the Chinese Government was going to be able to command a "soft landing", which means they were going to be able to manage the struggling economy and housing market without seeing a significant decrease in overall growth. It now appears that the Chinese economy might be in for more of a "hard landing". One of the reasons for this is lackluster growth in the manufacturing industry (this was seen in the U.S. manufacturing index numbers that were released this morning and showed a decrease in our industry as well). That being said, the jury is still out on how the Chinese economy will fare but it is certainly something to keep an eye on...this is one of the reasons I started advising my clients to stear clear of investing in Asian mutual funds a couple of months back.
So, we've got good housing numbers and bad Chinese food to deal with today...hmm, it's almost lunch time, I wonder what I might have...
