Gold and Housing, Economic Report
Housing Boom Global Perspectives sees two things that you should know. George Soros is selling gold, and housing prices are going up. Why relevant?
1. Soros is a genius in trend analysis, and he sees recovery. Gold is the investment of fear and panic when investors believe that real estate and economies are poor investments. To sell gold is to be bullish. Soros, one of the worlds most significant investors believes the days of panic defensive investing are being replaced by other investments. His actions suggest that he is optimistic about other investments.
2. Housing prices are increasing. Even prices of foreclosed houses are increasing. The number of people who own homes that are worth less than people owe on their homes is declining, every time home values tick up another percentage point.
Therefore, as Global Perspectives has reported repeatedly, housing is now a desired "investment play" for smart investors. The days when "bottom feeders" were the only ones in the market are gone. large investment groups now see homes as a solid investment for growth and are predicting short and long term housing value increases. Demand for housing is increasing while at the same time new construction is significantly below high levels of years past. Watch construction companies and construction suppliers, because both will see business increases.
Supply and demand now indicate that new housing is attractive. This will not only increase jobs but have multiple positive impacts on bank balance sheets and likely improve the attitude of your banker the next time you request a loan. Timing is important.
"The ongoing price appreciation is significant, because we expect housing wealth effects to be an important factor driving economic growth in 2013, possibly matching the direct impact on economic output from the rebound in homebuilding," said Joseph LaVorgna, chief U.S. economist for Deutsche Bank.
Related: Housing to drive economic growth
Michael Gapen, senior U.S. economist for Barclays, said the fundamentals for the housing market are now strong enough that his firm is forecasting another 6% to 7% rise in prices in 2013, and a 5% to 6% rise again next year. He said the tight supply of homes for sale on the market should support continued price increases, and that the decline in foreclosed homes for sale is reducing the drag that those distressed properties had on overall prices.
The days of making huge profits in housing are past. Now is the time to make solid long term investments in housing expecting 2%, 3%, or 4% annual appreciation gains. Those numbers when compounded can add up to steady gains. In some pockets the values will increase even more, such as is being demonstrated in dynamic markets like Houston.