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Friday, May 4, 2012

Long Time Housing Bear Says It is Time to Get Back In


​I’m back in. Yes, I’ve finally purchased a house after renting for the past six years. I sold my previous house in May 2006 after nearly a decade of being a homeowner because I was convinced U.S. housing prices were set to fall, and I wrote about it in prior Credit Perspectives pieces, “For Sale” (June 2006) and “Still Renting” (May 2007). Many of my friends, family and colleagues have asked me over the past several years, “Are you still renting?” In fact, that is probably the question I’ve heard most often from clients, consultants and the media over the years.
So, next weekend I’ll be moving into a house. My decision to buy was mainly driven by the improved relative value of U.S. housing. When I sold my house in 2006, I purchased mainly corporate and municipal bonds where I believed high-single-digit annual returns were possible. In stark contrast, housing prices subsequently fell an amazing 34% from their April 2006 peak through March 2012, according to CoreLogic.
Today, however, U.S. housing looks like a decent place to put money over the next several years. I’m not sure if U.S. housing prices have bottomed – only time will tell – but there are many more positives today than there were six years ago when I sold my house. Just as important is how an improved outlook for U.S. housing is positive for the U.S. economy, consumers and for the banking sector.

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