To some, the sky may be falling, but to one economist who forecasts house price trends, falling consumer debt and the latest home price reports are causes for a little optimism. Ingo Winzer, who runs Local Market Monitor, a firm that forecasts home price trends in hundreds of U.S. markets, published his latest “National Economic Outlook” on September 6.
Winzer admits he is out on a limb in considering a “one month uptick” in consumer spending as a signal of better times. However, with consumer debt (excluding mortgages) falling 13 percent for 28 straight months before spending increased in August, Winzer points out that during the last recession with a real estate crash 20 years ago, consumer debt dropped 14 percent. A few key consumer-related benchmarks increase Winzer’s confidence in a turnaround, such as the credit card delinquency rate (3.6 percent compared with 6.5 percent in 2009); an increase of 6 percent in retail sales this year; and 1.3 million net new jobs created in the last 12 months. In terms of the real estate market, the average home price dropped 4 percent in the second quarter, a good sign according to Winzer because it implies the market is “now wringing out the last problems instead of being delayed by misguided policies.”
“We built 5 million too many homes,” Winzer writes. “We’ll only sell ‘em by cutting the price.”
The Local Market Monitor National Economic Outlook is available at its web site, LocalMarketMonitor.com. You will have to register for access to the report, but there is no charge. As we have written earlier, Local Market Monitor is also extending to readers of Golf Community Reviews a discount of 25 percent off its regular price for individual market reports. The service is the only national publisher that bases its forecasts for single-family and multi-family properties on risk assessment rather than recent transactions. A list of markets covered by Local Market Monitor is available at the web site, along with a sample report; if you decide to purchase one or more of the reports ($48.75 each after the discount), include the word “golf” during the checkout process (don't use the quote marks).