by Dan Krell ©2012
Some say that the world will end December 21st, 2012. However, rather than the world ending, some say that we will only see increased financial and social upheaval. Divination may be fine for some, but many economic and financial experts are resolve to figure out solutions to current economic issues.
So, as these financial and economic professionals argue how make the economy better, along comes Jim Rogers. (If you’ve never heard of Jim Rogers, he is described as an investor and economic commentator who is often featured in frequently featured in Time, The Washington Post, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times, and other economic and financial publications; jimrogers-investments.blogspot.com.) Prophetic, forward thinking Jim Rogers drops a bombshell: economic slowdowns occur in the United States every 4 to 6 years, which has been happening since the country was founded – and 2013 will be 6 years from the technical beginning of the most recent recession that began in 2007.
Don’t get too excited yet, Rogers has been talking about recession/economic slowdown for several years. And although he hasn’t provided any specific dates, his most recent comments seem to be saying that we’re overdue.
But some would argue that the housing industry continues to struggle and has not yet emerged from the most recent recession. Even when recent initial annual reports attempt to instill optimism, we have been disappointed by lackluster midyear sales numbers. This year will be no different.
Consider that the National Association of Realtors® (realtor.org) recently announced that existing home sales in March 2012 declined 2.6% from February. However, even though March sales declined from the previous month, the report makes a point to say that home sales increased 5.2% compared to the same time last year.
However, local housing stats may be more telling. The Greater Capital Area Association of Realtors® (gcaar.com) reports Montgomery County single family home sales for March 2012 decreased 4% compared to the same time last year; and decreased 3.9% year to date 2012 compared to the same time last year. And although pending sales (homes under contract) have increased 5.2% year to date 2012 compared to the same time last year; the inventory of homes for sale has decreased 12.6% year to date 2012 compared to the same time last year – not leaving much choice for home buyers (data compiled from Metropolitan Regional Information Systems, Inc.).
Additionally, the most recent S&P/Case-Shiller Home Price Index (reported April 24th, 2012) indicated that February home prices “improved”- to an annual decline of 3.6% for the 10 City Composite; home prices in the Washington DC region remained relatively the same (standardandpoors.com). The Home Price Index, reported by the Federal Housing Finance Agency (fhfa.gov), indicated that home prices for the last quarter of 2011 decreased 1.1%.
Since decreased consumer sentiment and spending are associated with a recession; we could possibly see a temporary decrease in home sales, not unlike the post-financial-crisis sales of 2008/2009, if we experience a recession next year. As a result, home prices could also suffer.
However, as the housing market lumbers along, it becomes increasingly clear that the practical aspects of home sale figures have recently become less a function of the overall economy; rather, housing has become a function of a shifting perception of home ownership.
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This article is not intended to provide nor should it be relied upon for legal and financial advice. This article was originally published in the Montgomery County Sentinel the week of April 23, 2012. Using this article without permission is a violation of copyright laws. Copyright © 2012 Dan Krell.