Improving housing metrics / values = improving wealth effect

The following chart was created by the Chief Global Equitis Strategist at Jefferies, Sean Darby (reprinted courtesy of Business Insider).  I like his comment.  “A virtuous circle in U.S. housing has commenced.”  Home values are rising and the willingness and ability of the public to buy is improving.  To be sure, rising home prices may pull more shadow inventory into the market but the facts remain – 5 years of depressed home building is finally restoring better supply/demand conditions.  Rising home values and a rising stock market = rising household net worth. The resultant wealth effect may produce a welcomed tailwind for GDP growth and renewed investment in capital goods and equities.  Jeb B Terry, Sr.Jan. 27, 2013.

Hoem Prices Buyer Flow 1-27-13

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