Fasten Your Seatbelts. Real Estate Has Turned the Corner!

The New York-based Conference Board issued its monthly forecast of economic activity yesterday, and the data held some extremely positive signs relative to the “sentiment” about the future.Now I know that consumer sentiment can be nebulous and intangible, but the reality is that this factor directly reflects what housing will do in the near future, and portends a bright future in the relative near term for real estate professionals. Let me explain.

This index by the Conference Board is a short-term view designed to forecast economic activity in the next three to six months based on 10 economic components, including stock prices, building permits, average weekly manufacturing hours and initial claims for unemployment benefits. You can see how the “mix” of these factors can actually reflect the current sentiment about housing in the future, can’t you? So we monitor these data with an eye towards one thing…what is the trend? Are things literally looking up?

Yesterday’s report for the first time in months said, “Yes, things are looking up for housing!” (My interpretation.) Here’s why.

December marked the first time during this crisis, that number for the “future” index exceeded the number for the “present.” It’s as if people were saying “sure it’s bad now. But if you are asking me about 3-6 months in the future, I’m not so pessimistic.” As Bloomberg reported, when this happens, “in the past this has always signaled the bottom of the crisis, and the end of the problem.”

This news builds on the housing data that came out yesterday to give us a super one-two punch of good news. As David Goldstein reported, December’s positive housing figures released yesterday surprised just about everyone, so amazing was the upturn. Think about it. During December when you and I were trying to figure out how to shop for holiday gifts more economically this year, while hearing all the crises coming out of the Fed and Paulson and President-elect Obama (remember? ),  there were thousands more Americans buying a home!

As the Conference Board’s economist Lawrence Yun stated:

“Buyers will continue to have an edge over sellers for the foreseeable future In home sales, buyers took advantage of dramatically lower prices, especially in distressed markets like California, Florida and Nevada…”

Combined with the economic forecast that even includes and assumes an increasing unemployment rate, but still remains positive, and we have the beginnings of the kind of positive “consumer sentiment” that will bring folks back to the market, fast.

Economists were caught this week snoozing, and most got whiplash with these two positive reports, so predisposed were they for more bad news.  Not many forecasted either report to be positive. But this data we report here is accumulating more and more positive sentiment. Can you feel it? Forget whether or not the stock market goes up or down today, this data suggests that things have turned.

Bottom line for real estate professionals like us?  Fasten your seatbelts. Things are turning around – maybe sooner than we all thought!

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About The Author: Tom Davidson is the acting Director of Sales & Operations for Express Schools, LLC. Since 1996 the companies under this banner have offered online real estate licensing and insurance licensing courses as well as online real estate exam prep and insurance exam prep.

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