USC’s Green: Housing Fundamentals Are Best in 17-18 Years

Friday, 29 Jun 2012 08:07 AM

By Dan Weil

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Recent evidence of strength in the housing market is leading experts to turn cautiously bullish on the sector.

“All bets are off if anything happens to the economy, but apart from that, I think the fundamentals look better than they’ve looked in 17 or 18 years,” Richard Green, a professor of real estate at the University of Southern California, tells The New York Times.

Low mortgage rates make homes attractive for buyers who would live in them, and rising rents make homes attractive for those would buy them as investors.

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.

“Compared to a lot of other investments right now this looks pretty good,” Green says.

As for the signs of strength, the S&P/Case-Shiller index of home prices rose 1.3 percent in April from March. And while prices are still dropped 1.9 percent from a year earlier, that’s the smallest annual decline since November 2010.

Meanwhile, pending home sales surged 5.9 percent in May, matching March’s two-year high. And though housing starts fell 4.8 percent last month, permits for future construction soared to the highest level in almost four years.

Hip cities popular with the young and affluent, such as San Francisco, Seattle, and San Francisco are leading the way, says Yale economist Robert Shiller, co-founder of the S&P/Case-Shiller index.

“A number of the cities that have done the best have been glamour cities,” he tells Bloomberg. “People have this speculative fervor. It comes back.”

Editor's Note: I Wish I Were Wrong — Economist Laments Being Right. See Interview.




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