The Case-Shiller housing index released this morning showed further proof that a recovery in the housing market is underway. Here are some of the highlights from the release:
- of the 20 cities that are measured, housing markets in all 20 cities rose year over year on average by 5.5%
- it was the 10th month in a row that prices have risen, the longest string of gains since the housing market started to turn down in 2006
- the rebounding housing market was a bright spot last year as prices began to rise and inventories tightened (it appears that the housing market could once again add growth to the economy in 2013)
Here are some negative issues addressed in the release:
- interest rates could possibly start to rise this year hurting the borrowing capabilities of home buyers (especially since most lenders are requiring higher down payments now)
- the increased payroll tax which started this year could hamper consumer spending and confidence (which could deter home buyers)
- the Case-Shiller index numbers are 6 months old and housing market prices softened up in the latter part of 2012 so we will likely see several negative numbers over the coming months
- home prices are still 30% below the peak of April 2006 (the below appraised value of homes from the good ol' days is still serving as a negative reminder of how buying a house can come back to haunt a person)
Some other notes of interest this morning:
- Yahoo released great earnings this morning and the new CE0 is doing a great job of turning the company around (we owned Yahoo from $14 and sold it around $19.50) - the stock is off today down 3% to around $19.75 b/c it has moved up in a pretty aggressive trend and there is some profit taking going on; I would buy the stock back if it dropped back to the $18.50 area
- Ford (which we own) released great earnings this morning and is seeing good global growth in its brands EXCEPT in Europe where the company warned that the do not see or expect much growth from there...this is somewhat expected as greater Europe is still struggling under the financial crisis that began 2 years ago
- the majority of technology companies are coming out with below consensus earnings (this is something to watch to see if this is a trend...this is mostly due to the lack of government spending internationally on technology products
- consumer confidence index released this morning was a huge miss and reflects a continued concern on economic growth, increased payroll taxes, and the ongoing gridlock in Washington by our politicians
We continue to look to take profits on our current investments and we are taking the proceeds and waiting for the market/stocks to come down in price before we deploy a lot more capital into the market. I expect that stocks will take a break from their upper trend seen so far this year and I think stocks will sell off sometime very soon (there's way too much jubilation/excitement surrounding stocks - usually when we see this type of "crowd behavior", it has proven wise to be cautious and not follow the crowd). While I still think 2013 is going to be a great year for stocks, I do not see right now as being a great time to fully jump into the markets and invest 100% of ones money; I think a more prudent approach would be to invest a little money now, wait a few days or a week and invest somemore, and continue to do the same thing over and over - in doing so you avoid the temptation to "time the market", where at the same time if stocks sell off you can pick up some at lower prices (buy low sell high).
