During the recent economic crisis, one of the hardest hit sectors of the economy was the housing market. Because of the spike in foreclosures and the rapid decrease in home values, many people still hold a negative perception of the housing market, but the good news is that recent data indicates that things are not as bad as you probably think.
We have seen several positive indicators this past year, including a recent increase in building permits, and you only need to look at the performance of housing stocks such a KB Home (KBH) and Lennar Corp. (LEN) to see how positive Wall Street has turned on the sector.
There was more positive housing news today, with the S&P/Case Shiller composite indicating that, on average, the 20 metropolitan areas it covers had an increase in home value of 0.7% in October. The rise was greater than the 0.5% increase that analysts expected to see and it marks the ninth straight month we have had rising home prices.
Year over year home prices in the 20 areas that the index tracks rose 4.3%, even better than the 4.0% analysts had been expecting to see.
Areas that were hit especially hard during the recession are seeing the biggest jumps, with Las Vegas showing the largest monthly rise of 2.4%, followed by San Diego with a 1.7% increase in October
Without question we are witnessing a resurgence of the housing market. I expect to see this trend continue as homebuyers rush to take advantage of low interest rates while they last. Now that we are seeing both low interest rates and rising home values, I thikn more people will start considering a new home purchase before it's too late to take advantage of the situation. With housing momentum is the key, and we're seeing some positive trends develop.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. Follow Michael on Twitter @MFatMICenter.