I found an interesting article this month from The Wall Street Journal about how the housing market is trending up. One line, in particular, caught my eye:
“One reason home prices have been climbing is lack of supply. From 1970 until the end of 2000—a period that includes five recessions—starts on single-family homes averaged nearly 1.1 million a year. As of May, the rate was only 764,000.”
The data tells me that the market is still just heating up. An increased number of new homes will have to be built to keep up with demand, and since land over the past nine years has been relatively inexpensive, home prices should continue to increase substantially as land becomes more expensive.
This is good news for land investors because I expect the value of land owned by Joffe Land Companies to increase in value. As this article from Builder Online suggests, the housing market is the largest sector of our economy. It brought us into the recent great recession, but that doesn’t mean it will be the cause of the next recession. In fact, it could be what helps pull us out similar to what occurred during the “dotcom bust.”
Markets will always fluctuate, but the bottom line is the housing market is healthy, and many more homes will need to be built over the next number of years to outpace current and projected demand.