Reading the Tea Leaves
Among the main indicators of the real estate recovery are home prices, inventory levels and unemployment figures. “Average home sale prices are trending up,” said Perriello. “There was a 4.3-month supply of homes at the beginning of the year—that is now starting to improve. The unemployment rate is trailing down and moving in the right direction.”
According to Perriello, in 2009, 6 million jobs were lost; in 2010, 8 million jobs were lost. “We’ve added back close to 6 million,” he explained. “By the end of 2014, we should be back to where we were before the recession.”
Perriello cautioned, however, that jobs need to “season for a while before they have an impact on housing. If I get a job today, the lender will want to wait and make sure I stay in that job.”
Rising interest rates also serve as important tea leaves for the recovery’s path, and are actually a positive indicator. “We’re starting to see treasuries and interest rates rising,” said Perriello. “But in an improving economy, we expect to see this. The rates have been artificially low in the past couple of years.”
