On July 27^th, the Conference Board reported that its Consumer Confidence Index fell to 50.4 from June’s revised reading of 54.3.

When will confidence improve?  We all know the two basic answers to that question are:  One, just as soon as individuals begin to see steady increases in employment, and two, as soon as the general public gets a sense of how their personal finances and tax burden are going to be affected by all the recent government actions.

A big boost to confidence will come with Job growth.  New jobs are not only good for the unemployed, they also provide a greater sense of security to those already employed.  Additionally, there soon will be some clarity on how our individual tax liabilities are going to change.  Then, consumers can again begin making decisions on longer-term commitments.  These two facts will have a compound positive effect on the housing market.  For, as confident buyers emerge, the housing market’s return will accelerate, and values will begin to climb.  Along with that, under-water owners will be floated to a positive equity position again, reversing the foreclosure trend.  There is potential for the return of the housing market to have an accelerated start.

The return of the housing market will be driven by two strong forces.  The first is buyers who deferred their purchases when the market slumped.  And, the second is the back-up of new buyers as a result of population growth over the course of the downturn.

This will put pressure on inventories.   On a Trailing-Twelve-Months basis, Ada County currently has 6.6 months of inventory.   That number as of early last year was in the 14’s.  There is no slack in the system.  New home construction has been negligible for the past couple of years, and a start up won’t happen quickly since development of the land is necessary before any construction can happen. 

These dynamics indicate that the early bird will: get the best selection, lowest price, capture the greater amount of appreciation over time, and at today’s rates, borrow at the lowest rates in over 60 years.

So, monitor that consumer confidence.    But, it will only confirm what you’ll already sense – everything seems a bit better than it did yesterday . . .last week . . .last month.  At this point, the green light comes from your gut.  Make the move!

I’ll help you do it.   – Alan Smith      http://www.AlanSmith-RE.com       (208) 473-0343

Posted on Monday, August 2nd, 2010 at 9:44 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.