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Health & Fitness

Great News! Housing Recovery May be in Full Swing!

The housing recovery in Georgia may be in full swing. Although the AJC recently reported that Georgia was #1 in the US in foreclosures, John Colegrove believes that this is good news, not bad news.

During the 6+ years of this Great Recession, we have all longed to find a silver lining in our economic news; and although the worst of the financial crisis is now in the rear view mirror, the average American family has not enjoyed the "recovery" that has been trumpeted by Washington and the media.

As a financial advisor, my job has been to sort through the noise for my clients and the story I've been telling has been quite simple: The Great Recession started with the collapse of the U.S. housing market. And when our housing market begins to recover, this will signal a true recovery that will likely have a positive impact on all of us.

In the last few weeks and especially today, I've read the most encouraging news that I've come across since the Great Recession began in late 2007. But some  of what I interpret as "good news" may surprise you.

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Good News #1: Georgia Tops the Nation in Foreclosure Rates for the month
of May
. Now you may be scratching your head, wondering how on earth I can see this AJC story as good news. Let me explain: If you're like most Georgians, you've seen your share of empty houses in your neighborhood. Empty houses are bad news. Here's why: As a homeowner, you are essentially running a small economy. There's the usual expense of mortgage and utility bills. But think about all your other expenses, including landscaping, repairs, and trips to Home Depot and Lowes. The amount of business that you support—just from your home—amounts to your own personal small economy. So when a home becomes vacant, that small economy disappears. A very vital step to recovering that small piece of the economy occurs when a new family moves into that vacant home. And that can't occur until the bank declares foreclosure. Additionally, think about how empty homes impact new home construction. A new home construction company can't afford to build a new home when so many empty homes depress prices. Now that you understand a little of the background, you may better understand why the AJC news is good news, not bad news. As an aside, please don't read this article and think that I'm not sensitive to the financial plight of many of our neighbors. The loss of jobs has made it especially hard for families to keep their homes. And as a financial advisor, I've seen that first hand with some of my clients. But the cold truth is that if someone can't pay for a home, the bank needs to take possession and sell that property to someone who is able to pay. With Georgia foreclosures ranking #1 in the country, I think we can read that statistic as a sign of recovery.

Good News #2: Existing Home Prices Up in State of Georgia. Just a few weeks ago, the AJC reported that existing home prices actually inched up in the state of Georgia. This news was no surprise, based on the fact that so many homes had recently gone into foreclosure. Simply put, this is a sign that the "excess inventory" of Georgia homes is beginning to grow smaller. Additionally, to be fair, since so many homeowners are "under water," they have elected not to sell their homes. This combination has likely led to a small rise in home prices, which is another great sign.

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Good News #3--WSJ Reports that the US Housing Bust is Over. The WSJ article sites some very encouraging statistics including:

  • There were nearly 10% more existing home sales across U.S. in May 2012 than in May of 2011.
  • The inventory of homes on the market has fallen to the "normal level" of
    6 months of inventory—even in light of the number of foreclosed homes owned by banks.
  • Builders began work on 26% more new homes in May of 2012 than in May of 2011.

 

The bottom line is that there is really some excellent news for all of us to sink our teeth into. But remember, the press (liberal and conservative) is in the market to sell news and bad news sells better than good news. So sometimes you have to read between the lines. That's what I did when I read about Georgia's #1 ranking in foreclosures. That news, in my opinion, signals housing recovery in our state. And the Wall Street Journal concurs.

John Colegrove provides hometown investment advice in Peachtree Corners. He is a Financial Advisor and Branch Manager though LPL Financial. To learn more about his practice, visit his website at www.JohnColegrove.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC

Third party posts found on this profile do not reflect the views of LPL Financial and have not been reviewed by LPL Financial as to accuracy or completeness. Additionally, the opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: AL, FL, GA, MA, MN, MO, NC, NV, SC, VA, WA. The Patch and LPL Financial are not affiliated.

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