An August report from Home Depot Inc. ($HD), the world’s largest home improvement retailer, show customers have never spent more than they have in the past three months. Besides surging Home Depot’s stock prices higher, this also provides more fuel to the increasingly strong real estate market.
Why is this such a good sign? After all, Home Depot is just one store, how much can it reflect the strength of the real estate industry and economy as a whole?
Let’s take it one step further. Homeowners and general contractors are equally important variables. Homeowners have been purchasing more and more home improvement goods. Whether it be to increase value and sell, or just to add to a new house purchase, neither would be occurring if the market wasn’t steadily increasing in strength. Further still, contractors are purchasing more materials to build. This proves a strong correlation with the spike in new construction across the country. Buildings are being constructed at an alarming rate, including those that were put on hold during the recession.
No Sign of this Seller’s Market Weakening
With all these signs pointing to a seller’s market in most areas, one would think that there will be a shift toward a buyer’s market before long. However, taking into consideration the different markets across the country, there are no signs of changes to come.
Homes in the hottest markets are still flying off the shelf, with only 26% of homes being available one month later in San Francisco. These extremely hot markets are slowing though, mainly due to the affordability factor. In slower markets, such as those in Detroit and Kansas City, we notice an increase in the speed at which homes sell. Once again, this is likely due to various factors making homes in these markets much easier to afford .
Using a bird’s eye view, we can visualize the stabilization of the real estate industry across the nation. Markets that are last to recover from the recession are ramping up, and the hottest markets in the country are slowing. With great interest rates still available, we still see buyers fighting over the inventory – and that doesn’t seem to be changing anytime soon. So, make sure to do your due diligence and start making some offers, as you’ll want to be in this rising market sooner than later!
DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer