Prices Still Climbing

Considering the amount of confusing press on housing, here's an interesting bit of info: the National Association of Realtors (NAR) says that for the month of November, housing inventory levels were up 1.2 percent at month end with 2.90 million existing homes for sale. (Keep in mind that new construction is tracked separately.) This is a 5 month supply at the current market "absorption" or sales rate. While single family home sales dropped 1.9 percent from October figures to a seasonally adjusted rate of 6.11 million units, prices were seen to increase 13.5 percent over the year to a median sales price of $213,500. So, even when the inventory of homes on the market increased, we are still seeing increases in price year over year!

I'm sure this won't be the most confusing data I'll see in 2006. Once the consumer confidence data is released on the buying of the US populace over the 2005 holiday season, there will be a plethora of pundits just waiting to stare into crystal balls and make pronouncements of many kinds -- good, bad and indifferent.

As a confirmed housing market watcher myself, here's what I do know:

1. As we move into spring, the buying and selling of houses tends to go up;

2. Prices normally peak around mid to late summer;

3. Anything which can go up can also go down.

There it is in a nutshell. While it looks like our homes are still qualifying as "good investments" (which, of course, go up in value), the reality is that double-digit increases in prices are, in my opinion, artificial. They won't last forever. However, it's also true that over time, most houses tend to appreciate -- if you hold them long enough.

Michael

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