With home prices in the U.S. now up 10% year over year, the rally is undeniable and continues to pick up steam. As home prices increase, homeowners' equity follows and creates a positive feedback loop. This is a major positive for the U.S. economy.
Here are a few recent data points:
- The number of non-distressed homes for sale is at its lowest point since data began being collected in 1983.
- In a specific market in Florida I follow, sales volumes are the highest level in over seven years, while listed inventory is down over 70%.
- Nationally, the level of distressed homes peaked three years ago and has been trending down since.
- For the past five years, the ratio of population growth to housing starts has remained at a level above peaks experienced over the prior 50 years. This creates substantial pent-up demand.
- Demolitions are artificially low today. The current rate of demolitions relative to housing stock implies that a home lasts an average of 500 years; this seems somewhat optimistic. As demolitions pick up, this further increases replacement demand.