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How Long Will the Housing Recovery Last?

With the Labor Day holiday now in the rear view mirror, it’s time to hang up the beach towels, put the kids in school, and get back to business.

If you’ve been paying attention to the economic trends this summer, you already know that the environment has been improving. Consumer confidence is growing, the latest round of retail sales showed acceleration, and the stock market is within striking distance of 52 week highs.

On the housing front, the bullish trend is picking up momentum. Home prices climbed throughout the summer as inventory levels of homes for sale have finally dropped to reasonable levels.

With home prices improving, we’re starting to see more commentary on the real estate industry. The big question right now is how long prices will continue to rise, and whether the strength will continue to support both the affluent side of the market as well as the lower end of the price spectrum.

One thing to consider when analyzing this recovery, is the magnitude of the previous drop in housing prices. We’re exiting a period where prices have dropped far from their peak values, and have been under pressure for a period of not months, but years.

So when we experience a few months of improvement, it’s natural for homeowners and investors to be skeptical of the advance. But the reality is, that we can expect the recovery to last much longer (with significant price advances still to come), before coming anywhere close to reaching an “extended” or “over-valued” environment.

This brings up two very important discussions:

Investment Opportunities

I recently had a prospective investor ask me if he thought it was too late to get involved in the real estate market.

After seeing home prices advance in the Atlanta area, he was worried that he may have missed the boat. He was frustrated, thinking that he had been waiting for the market to bottom for years, only to miss his opportunity by a few months.

My advice to him was to look at the recent advances within the context of the last 10 years of price action. The rebound from the last few months is material enough to signal that the advance is legitimate, but not anywhere close to putting the market into overbought or extended-valuation territory.

We have some exciting investment opportunities that we are currently tracking in our investment arm (Ashford Capital Partners). If you are interested in putting some of your investment capital to work in the vibrant Atlanta real estate market, give me a call and I can show you some of the tremendous deals that we are currently working on.

Homeowner Mobility

The second issue carries a much more personal note…

I know of a number of families in my neighborhood who have been waiting for the market to pick up so that they can make a housing transition.

There are several people who are looking to upgrade to a larger house, a few empty nest parents who now have too much space, and a number of families that have job opportunities in other parts of the country that require a move.

Given the improving state of the real estate market, these families now have the ability to pursue opportunities that simply weren’t available to them a year ago. Houses are being put on the market – and actually SOLD in a reasonable period of time. I can’t tell you how refreshing this is for families who have been patiently waiting for the opportunity to make an important transition.

If your family fits into this category, and you would like to explore the possibility of selling your house, buying a new home, or even renting out your property to generate income, we should have a conversation.
I would be happy to sit down with you at your home – or we could grab a cup of coffee at Starbucks – and discuss your situation. I think you’ll be impressed with the options available to you, along with the quality of service that we offer through our retail division – Ashford Advisors.

I hope you and your family had a wonderful Labor Day weekend, and I look forward to speaking with you in the next few weeks.

Wishing you every success,

Matt

Matthew J. Riedemann
Founder, President, & Managing Director
Ashford Capital Partners, Ashford Advisors
678-231-4579
Matt@AshfordCP.com