“To know that we have a place to call home, it’s a very satisfying feeling to have,” said Brown. “So definitely having that $8,000 tax credit spurred me to look a little harder and (buy) a house earlier.”
The nominal (U.S. Dollar) housing index illustrates this liquidity-driven bounce. It's an impressive bounce on paper. Unfortunately, this bounce like many other media perceptions is embedded with the devaluation illusion. When the index is priced in a stable currency such as gold, impressive quickly fades into mediocre.
Nominal Housing Index:
Gold Adjusted Housing Index:
Granted, the tax credits and other free money programs have generated some new, marginal demand in real estate. But has anything really changed other than recognition that a problem exists? A large chunk of today's sales are nothing more than pulling forward future demand. The dominant, supply and demand driven trends will reassert their influence once stimulus is removed.
Months Supply And Change YOY (Long Term Supply and Demand):
Source:cantonrep.com
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