by MITCH DIETZ
Does anyone else miss the old-fashioned paper road map? Images of a childhood family road-trip come to mind, unfolding the map in the front seat of the station wagon to chart the route of some great new adventure.
The map is a great thing because its maker is assuring that even though the road is unfamiliar, it will nevertheless lead to the desired destination. There is something comforting knowing that someone else has charted out the course.
In real estate, we have certain road maps. We know from past experience that trends in the number of home sales precede trends in home prices. Between 18 and 24 months after a change in number of sales, home prices begin to follow that path just charted.
For this reason, it is important that we chart the progress of the number of sales. In the spring of 2012 we began reporting that home sales were on the rise. Now, 18 months later we have a well-established trend of rising sales. Home buyers are back. They have purchased 26% more homes than during the same period in 2011.
As a result, prices are now escalating. Over the past three months, we have seen steady gains in average sales price. (See Chart above). While this is not a long pattern, it is more evidence that we are on the right road to sustained recovery. If current trends continue, we should be back to the steady, familiar place our market has long enjoyed – - healthy, modest gains in home prices.
Now, if I could just remember how to refold that road map. On second thought, maybe I’ll just rely on Google Maps.
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