Monday, January 28, 2013

A Banner 2013 ahead... Bet the house on it!

It seems like the popular consensus on main street is that the U.S. Economy that has been plugging along over the last 2 years, might actually be on the up swing.   All roads seem to lead to a profitable 2013 on all major fronts that include: consumer spending, purchases of durable goods, and last but certainly not least home prices are on the rise.

The S&P/Case-Shiller nationwide home price index was up 3.6% from its year-ago level, its second year-over-year gain.
The Federal Housing Finance Agency uses different price methodology but came to the same basic conclusion: its third-quarter U.S. price index for purchased homes increased 4.0% from a year ago.

The uptrend in prices shows supply and demand are in better balance in both new and existing home markets. Of course, new home construction feeds more into gross domestic product but demand for both types of housing is good for consumer confidence and leads to future home-related purchases such as appliances, textiles and landscaping services.

News that home prices are no longer falling are also drawing out more potential buyers–as are record-low mortgage rates engineered by the Federal Reserve. The Conference Board’s November 2012 consumer survey found 6.9% of respondents plan to buy a home in the next six months. While monthly results can be volatile, the percentage has been moving up since last spring.

If case studies and reports aren't your thing, then take a look around at your family and friends and ask --how work or business is like for them.  When it comes to us "normal" folk the economy is only as good as our ability to pay our bills. Majority of the people I interact with on a regular basis from successful business owners to their employees seem to think that things are going "ok" which seems to be the new "good". It's almost as if the last 2 years have left many of us so battered and bruised that we are just happy that things have not gotten any worse. 

Over the last 2 weeks alone I have had calls and emails from colleagues with job openings, looking to hire experienced people in accounting and finance that had starting salaries in the $55-$60k range with benefits, while my own small business clients (the segment of business that employ about 75% of the working population) continue to add employees to their staff.

What makes that kind of news all the more optimistic is that these particular clients are in the manufacturing and construction industry, both industries that took some of the worst hits during the crisis of 2008. 

As the price of homes continue to rise slowly in some of the more devastated markets like California and  Nevada ,  with a more balanced demand vs. supply ratio home owners will feel the "wealth effect" of once again having some equity in their homes. The biggest difference now is the old adage of a lesson learned...that your house is somewhere you live not an ATM machine.

I would like to wish the small handful of readers of Dollarsintosense a belated Happy New Year - and I hope that your 2013 is off to as good of a start as the news on this blog post! 
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