When we look at the broader US economy over the last decade, we have seen some very interesting market trends that have defined the period. According to many analysts, real estate markets have yet to overcome the negatives that were seen during the housing bubble and this is important for all consumers with investments regardless of the asset type. Over the last year, the monthly housing price index has drifted lower from its highs in January and this suggests that new home buyers will still be able to find real estate opportunities in most of the country’s regional markets.
This is critcal for all types of homebuyers but it is particularly impoprtant for those buying their first home as it can essentially make all of the difference when you are looking to maximize your opportunities for buying a well-priced piece of real estate.
Chart View: Housing Prices Monthly
In the chart above, we can see that national housing prices have really started to show stalling momentum over the last three months. The weakness here has not been evenly dispersed, and we are still seeing slower numbers in markets like California and Florida. This has not been the case in the Pacific Northwest,however, as markets like Seattle and Portland have benefited from California residents that have migrated to avoid the drought-ridden areas in the southern parts of the state.
Broader Volatility
When we look at the reasons for why these trends have occurred, it is important to look at the investment market as a whole. It is true that equity markets have risen to long-term highs and have held there (for the most part) and this is something that is generally encouraging for the real estate space as well. But there are other key areas that should be considered given the fact that commodities markets tend to have an inversely correlated relationship with what tends to be happening in real estate markets.
Overall, we have seen massive rallies in commodities and this is a large part of the explanation for why fund ownership of BHP Billiton is rising. These types of events do not exist in a bubble, and those looking to invest in property should look at these situations before making any major purchases.
In general, property markets tend to perform best when equities are lackluster and commodities prices are lower. This helps to cut costs in the actual home building process and when this filters into lower purchasing prices it can be beneficial for homeowners in a few different areas. So if you are a newer homeowner or looking to buy with a limited budget, these are some of the factors that you should consider. There are still some excellent deals available in the US housing market if you are able to choose an underserved geographical location and you are willing to put in the research needed to select the appropriate types of home and land combinations.
