This week’s issue of Fortune Magazine proclaims the “return of real estate”. I didn’t think I would see an article like this from a mainstream publication so soon – especially from one of the most trusted financial magazines. Could this mark the beginning of more good news to come?
“Forget stocks. Don’t bet on gold. After four years of plunging home prices, the most attractive asset class in America is housing,” writes Shawn Tully.
The article covers five trends as justification for improvement in the real estate market:
- The steady decline in prices which has been going on nationally since 2005 has finally hit a level where it costs less to own a house than to rent in many cities.
- The supply of renters has increased sharply in the recent past, which has already begun to cause rapid increases in rental rates.
- Home builders have held back on building new homes for several years, creating the conditions for a shortage of new homes when demand goes up just a little bit.
- Investors, responding to the big demand for rental units, are rapidly buying down the overhang of foreclosed homes which has dogged the market.
- Finally, the U.S. economy seems to be on the path to improvement, although we still struggle with high unemployment and weaker-than-normal consumer spending.