Supply and Demand Support Rising Housing Prices Provided Rates Stay Low- Professional Edition

Share!Tweet about this on TwitterShare on FacebookShare on LinkedInEmail this to someonePrint this page

The supply side of the law of supply and demand is working. Low prices caused supply to be removed from the market over the past year. Prices have not risen enough yet to stimulate supply enough to reverse the recent price uptrend.

Employment markers continue to show modest growth, with approximately 1.4 million full time jobs added in the past 12 months, versus just 750,000 housing units started.

The supply of existing houses on the market has been radically reduced, while builders continue to build, but the pace of new construction is below the increase in demand. That means the market will continue to tighten as long as the number of full time jobs continues to grow.

The market has also been benefiting from capital flight from Europe and China. Canadian and South American buyers are also active in Sunbelt markets. This particularly helps major coastal “glamour” markets. The difference between the performance of those markets and central heartland markets is night and day.

The price data is unequivocal. Prices are up significantly over the past year, with gains of 5% to 10% depending on the measure.

As I wrote in June, my guess is that as long as European, South American, Canadian, and Chinese money continues to flood into the US, and as long as full time employment continues to grow modestly, housing prices will continue to surprise to the upside. But housing is local, and whether you benefit or not depends on where you are.

My primary concern in this analysis is the impact of the performance of the housing market in the aggregate on the financial system as a whole. Housing collateral is a critical component of the system, and it is important to understand how it fits into the big picture. This report gives, charts, details and clear analysis to give you that perspective.

Click here to download complete report in pdf format (Professional Edition Subscribers) including 32 pages of charts and clear, cutting edge analysis that you can use to gain an edge in the market. Try the Professional Edition risk free for thirty days. If, within that time, you don’t find the information useful, I will give you a full refund. It’s that simple. 30 day risk free trial for new subscribers. Click here for more information.

3 month subscription to the Wall Street Examiner Professional Edition, Money-Liquidity-Real Estate package, renewing automatically unless canceled.

Price: $89.00

By clicking this button, I agree to the Wall Street Examiner’s Terms of Use.

Enter your email address in the form to receive email notification when Professional Edition reports are posted.


Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also provide analysis and charts for David Stockman's Contra Corner which I developed for Mr. Stockman. I’ve had a wide variety of finance related jobs in the past 44 years, including a stint on Wall Street in both analytical and sales capacities. Prior to starting the Wall Street Examiner I worked as a commercial real estate appraiser in Florida for 15 years. I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. My perspective is not of the Ivory Tower. It is from having my boots on the ground and in the trenches of the industries that I analyze and write about today.